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Pakistan Money Market Review

Updated on Dec 11, 2000

It has been since the 28th of September that overnight rate have been at sky high levels. Changes in the discount rate, depreciation of the Pak. Rupee and the increase in the cash reserve requirement have primarily been responsible for a general rise in the interest rate scenario. A short market with the State Bank having to provide assistance to a maximum of approximately Rs. 27 billion has also been one of the highlights of this period. However, it was in the past week that the short term rates finally fell off from the 12.95% mark. Earlier activity was witnessed at 12.95%, but after the injection of Rs. 10.30 billion in the two week tenor, overnight rates eased off to 11.00% and trades were also witnessed at around 9.00% on Saturday.

The overnight market may have come off due to the injection by the State Bank, but term rates did not witnessed any major change. Bids for one month tenor did eased to 11.50% but offers were generally lacking and bids finally touching 12.00% and offers in the band of 12.50% and 12.75%. Three and six month tenors also lacked any significant interest with bids and offers hovering in between 11.50% and 12.00%. Maturity of injections made in OMOs on the 21st of November and on the 7th of December is set to fall on the 21st of December in the form of a total outflow of Rs. 16.70 billion. One reason for term rates maintaining a firm stance has been this expected outflow in December, a traditionally tight month of the year. On the other hand, hints of a tighter monetary policy in the near future have also caused market players to be cautious on this sudden ease in the short term market.

Trading of the PIBs also got under way the past week, with nominal amounts changing hands between the primary dealers. Activity was witnessed at premiums with prices for the 10 year paper being quoted in between prices of 100.20 and 100.60. It should be noted that most of the trades were due to the significant interest for these debt instruments in the corporate sector.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

12.25

12.25

11.25%

2 Year

12.75

12.80

12.00%

3 Year

13.35

13.50

13.00%

4 Year

13.75

13.75

13.25%

S Year

14.00

14.00

13.75%

10 Year

14.75

14.75

14.25%

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AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Nov  29 T-BILL Nov 29 Nov 30
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs. 2.708 Bln.

Rs. 2 Bln.

Rs. 1.049 Bln.



MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

14 Dec

500 Mln

T-Bill

28 Dec

7,622 Mln




REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

09.50

12.95

11.00

1 Week

09.25

12.95

10.00

1 Month

12.00

12.95

10.75

3 Month

11.65

12.00

09.50

6 Month

11.55

11.70

09.70

1 Year

11.75

11.90

N. A.




TREASURY BILL RATES
MATURING THIS WEEK 1 WEEK AGO 1 YEAR AGO

1 Month

13.00

13.95

11.75

2 Month

12.20

12.85

10.50

3 Month

11.90

12.15

09.60

4 Month

11.85

12.00

09.60

5 Month

11.80

11.70

09.70