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Pakistan Money Market Review

Updated on Mar 26, 2001

The interbank money market remained at the lower end of the spectrum during the week. The week was shortened due to the holiday of Pakistan Day on 23rd March. Overnight trading was conducted in between 1.50% and 2.50% with the market reflecting huge amounts of excess liquidity in the system. Unanticipated inflows on account of special T-Bills and public sector corporate bond maturities were to be blamed for this increased circulation of liquidity. Even the net outflow of approximately Rs. 5.28 on Thursday, on account of the T-Bill maturity and settlement, the market failed to crop up and remained at 2.00%. However it was only on Saturday that the market took a sharp turn with overnight levels touching 10.00% and finally closing at close to 7.00% after early morning trades at 2.00%.

The highlight of the week was the Treasury Bill which finally saw the State Bank raising the cut-off yields. Even more interesting was the fact that the market finally saw bids being accepted against the 6 and 12 month T-Bills. Against the pre-auction target of only Rs. 4 billion, SBP sold the T-Bill worth Rs. 13.63 billion. In order to gather such a amount the yields were raised with 11.28%, 11.60% and 11.95% being the cut-off for the 3, 6 and 12 month papers. The term market which has not moved much could not generate much activity as banks preferred to wait for the end of the quarter. One month repo levels did ease off as inflows in various forms came into the market but trades were hard to come by. Offers were present at 11.25% with bids ranging at close to 10.00%. The three month cut-off did cause repo levels to move but in the opposite direction. Offers were available in the three month tenor as low as 10.85 but bids remained at 10.75% with rates remaining mismatched.

A tight money market is what has been on the agenda as being heard in the last many days. However various inflows in the form of either special T-Bills or market loans or even public sector bond maturities have actually kept short term rates under pressure. With news circulating that the authorities still need to offload approximately Rs. 15-20 billion T-Bills in order to meet their NDA target for the quarter end, we feel that rates can certainly jump up. However, it still remains to be seen which of the many tools that the central bank has would be used to meet its targets for this quarter.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

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THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

11.90

11.90

08.75%

2 Year

12.40

12.40

09.25%

3 Year

12.90

12.70

09.75%

4 Year

13.00

13.00

10.00%

5 Year

13.25

13.00

10.50%

10 Year

13.50

13.25

11.25%

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AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Mar 21  T-BILL Mar 21 Mar 22
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.4,000 Bln 

Rs.19.430 Bln.

Rs.13.630 Bln



MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

08 Mar

4,833 Mln

T-Bill

22 Mar

2,850 Mln




REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

06.00

02.50

10.95

1 Week

06.00

03.50

09.40

1 Month

10.90

11.00

08.00

3 Month

10.75

10.90

07.60

6 Month

11.35

11.10

07.35

1 Year

11.75

11.50

N. A.




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

1 Month

12.00

12.00

09.00

2 Month

10.90

11.00

07.90

3 Month

10.85

10.95

07.80

4 Month

11.00

11.00

07.70

S Month

11.35

11.20

07.60