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Dec 18 - 24, 2000

SBP buys $45-50m from banks

The State Bank on Thursday purchased $45-$50 million in one-month swap with local currency from banks to keep the inter-bank market liquid and to cut its net domestic assets.

Bankers said SBP swapped $45-$50 million at 30 paisa premium over the spot price. The central bank had also swapped about $10- $15 million on Wednesday and is expected to end up buying $250- $300 million by the end of this month. SBP made no comments on the subject.

Bankers said money market remained liquid with overnight call rates oscillating between 4-5 per cent despite an outflow of around Rs 5 billion from the system. The outflow was on account of the settlement of the latest auction of Pakistan Investment Bonds and treasury bills. Bankers said the market was surplus by Rs 5-6 billion at the end of the day.

The liquid conditions of the rupee market coupled with higher demand for dollars on corporate and official debt payments kept the local currency under pressure for the third consecutive day. The rupee fell to 58.25 to a dollar in the inter-bank market on Thursday against the previous close of 58.19. Bankers said the rupee touched an intra-day low of 58.40 but some state-run banks supported it by selling greenbacks.

Corporate and official debt payments normally rise in December because of the year-end. Banks demand for rupee funds also rise at the same time because of larger withdrawals of deposits by the corporates. This time the year-end has coincided with the holy month of Ramazan that has paced up deposit withdrawals. Deposit withdrawals go up in Ramazan as both companies and individuals need more money for meeting pre-Eid expenses. This would have added to the liquidity crunch the banks were facing since early October had the State Bank not injected more than Rs 15 billion in the market earlier this month.

Banks plunged into a liquidity crisis in October after the SBP raised their cash reserves from five to seven per cent and also hiked its repo rate by one per cent to 13 per cent to stabilize the rupee.

Asian Development Bank okays $150m loan

The Asian Development Bank (ADB) on Wednesday approved assistance of $150 million to provide support to Pakistan's micro-finance sector.

The decision will provide affordable financial and social services to a large number of poor, especially women as a result of two loans totalling $150 million approved by the ADB.

The ADB is providing two concessional loans. One is a $70 million policy loan to support a reform programme for the microfinance sector. The other is $80 million investment loan to provide microfinance service to the poor and for institutional strengthening.

IDB to release $80m loan

The Islamic Development Bank (IDB) is expected to release a loan of $80 million next week on the basis of guarantees offered by the governments of Saudi Arabia, Qatar and the UAE.

The IDB had asked the government of Pakistan to arrange these guarantees for the release of this tranche, sources said.

The tranche is part of a $413 million in loans from IDB, which was already in the pipeline at the time of concluding the stand by arrangement with the International Monetary Fund (IMF).

The government is reported to have already availed itself of a tranche of $45 million from the Citibank, a fortnight ago, as a commercial loan, at 3.25 per cent plus LIBOR.

The $413 million IDB loan has been split into the following tranches: $50 million with two-year maturity and $80 million with a six-month rollover basis.

Citibank, NBP buy 64pc PIBs

State-run National Bank turned out to be the most active primary dealers of the SBP at the first auction of long-term Pakistan Investment Bonds on Tuesday. Citibank chased it closely.

Bankers said NBP purchased Rs1.470 billion worth of PIBs or 33 per cent of the total sale of Rs4.434 billion followed by Citibank that bought Rs1.377 billion worth of bonds or 31 per cent of the sale.

They said Standard Chartered purchased Rs 700 million worth of bonds (16pc); Union Bank and Habib Bank Rs 300 million and Rs 320 million (7 per cent each); ABN Amro Rs 217 million (5pc) and American Express Rs 50 million or about one per cent of the total sale.

Treasury bills

The State Bank on Wednesday raised short term debt worth Rs629.6 million for the government through sale of treasury bills.

Bankers said SBP sold Rs400 million worth of six-monthly TBs and Rs229.6 million worth of one-year TBs at a maximum yield of 10.95 per cent and 11.48 per cent respectively.

Dividend on mutual funds

The Board of Directors of Investment Corporation of Pakistan (ICP), which met under the chairmanship of its Managing Director, Istaqbal Mehdi, approved dividends on its Mutual Funds for the year ended June 30, 2000.

The Board declared final dividend on 15 out of a total of 26 mutual funds with highest dividend of 50 per cent declared on 9th Mutual Fund followed by 30 per cent on its 4th Mutual Fund.

Dadex Eternit

Dadex posted pretax profit for the year ended June 30, 2000, amounting to Rs78.1 million, representing 16.6 per cent improvement year-on-year. After tax profit was up 10.5 per cent to Rs66.1 million, from Rs59.8 million the previous year. Earning per share worked out at Rs6.14. The board has recommended cash dividend at Rs4 per share same as last year.

Ferozsons Laboratories

For the latest year ended June 30, 2000, Ferozsons posted 42 per cent increase in profit to Rs31.0 million, from a year ago profit amounting to Rs21.9 million. Profit after tax showed growth of 40.2 per cent to Rs18.6 million, from Rs13.2 million. On the 3.5329 million outstanding shares, after tax profit represented earning per share at Rs 5.25.


Telecard Limited the payphone company posted nearly 600 per cent increase in after tax profit to Rs27 million for the year ended June 30, 2000, as compared to previous year's after-tax profit at Rs4.1 million. The improvement followed sales revenue at Rs543.4 million, which was reported to be about twice the earlier year's revenue at Rs284.3 million.