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Pakistan Money Market Review

Updated on Jan 06, 2001

The sky rocketing of rates witnessed was only restricted to the 31st of December. Banks having to cover their positions from the market at rates of 45.00% while some trades according to unconfirmed reports were conducted in three digit levels. All this furor of activity was witnessed even with the cash reserve requirement being brought down to a zero per cent of the demand and time liabilities for the year end. However, rates on the 2nd of January were unmoved from the 13.00% level with reports of the discounting figure being as high as Rs. 60 billion. As the week progressed the shortness in the market did ease off due to the injection of Rs. 13.50 billion in the OMO on Thursday. The discounting figure fell off to around 18.0 bln at the end of the week.

Activity in the term market did pick up at the start of the new year. Significant interest was evident in longer tenors of three and six months. Bids for both these tenors were available at 11.65% and 12.00%, respectively. However, it was after the OMO that three month activity was witnessed at levels close to 12.00%. One month rates still slightly higher did see bids at around 12.00% which later fell off to 11.75% on offers being quoted around 12.25%. One month trades were hard to come by. Bond prices that had fallen in the last week of December bounced back up and touched the 10040 level for the 10 yr. PIB. However, trading was thin and was witnessed between 100.20 and 100.35 for amount ranging from Rs. 5 million to Rs. 100 million. Yet again most of the buying for these papers was corporate driven.

The OMO injection of Rs. 13.50 billion for one week did little to ease the liquidity crunch in the market which had witnessed the peak shortfall of about Rs. 63 billion but had later fallen to Rs. 40.0 bln at the time of the injection. Prior to the announcement market players had been anticipating injection for at least one month but the authorities preferred to stick to one week. Inflows due to T-Bill maturities and also the cash reserve requirement related repo (1 month repo conducted last month) maturity with chances of a simultaneous adjustment i.e. from 7% to 5% (according to market rumors) may not actually manage to provide relief to the liquidity struck money market. The reason for this is obvious as there will be foreign exchange swap maturities which will fall due during the middle of this month and will drain approximately Rs. 7.0 bln to Rs. 8.0 bln (against an estimated USD$ 125.0 mln) along with the scheduled bill auction next which is expected to garner decent participation.

 

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 year

12.05

12.25

09.50%

2 year

12.80

12.75

10.00%

3 year

13.50

13.35

11.25%

4 year

13.75

13.50

11.50%

5 year

14.00

14.00

11.75%

10 year

14.75

14.75

12 75%

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AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Dec 13 T-BILL Dec 13 Dec 14
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.8.050 Bln.

Rs.3.629 Bln.

Rs.629 Mln.


 
MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

11 Jan

8,450 Mln

T-Bill

28 Dec

6,600 Mln



 

REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

12.95

45.00

04.75

1 Week

12.40

25.00

06.50

1 Month

12.00

17.00

07.10

3 Month

11.80

12.15

07.50

6 Month

11.75

11.90

08.00

1 Year

12.00

12.00

N. A



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

1 Month

13.00

18.00

07.75

2 Month

11.75

12.85

07.65

3 Month

11.85

12.00

07.60

4 Month

11.80

11.80

07.75

5 Month

11.75

11.60

08.00