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Pakistan Money Market Review

Updated on Apr 21, 2001

Primary market activity was witnessed in the past week in the form of the Treasury Bill and the Pakistan Investment Bond auctions. The State Bank managed to sell a total amount of Rs. 16.20 billion worth of bills and bonds. Short term rates remained well at the higher end with the overnight repo rate being glued at the 12.95% whereas overnight call transactions were conducted at higher rates as well. The money market remained short with banks continuing to avail the repo discounting facility from the Central Bank with a high of Rs. 13.50 billion reported on Friday.

Term market activity was heavy the past week with banks concentrating in borrowing tenors ranging from two to four months. Some covering their June 30th positions by borrowing three months at levels as high as 11.60% while some also covered themselves for four months at similar levels. It was only after the T-Bill auction that term rates eased-off with offers available for three months as low as 11.30%. However trades were scarce at the lower end. One month repo bids and offers initially at 11.35% and 11.75% were quoted at 10.90% and 11.10% after brisk trades being conducted at 11.10% and 11.25%. The market for call transactions also saw the rates coming off sharply with the one and two month tenors being hardest hit. One and two month call offers were available at 11.25% and 11.80% respectively with activity at 11.25% in the one month tenor. Two month call offers were also present at 11.80% but bids were hard to come by. On one hand SBP sold a total amount of Rs. 11.51 billion of PIBs while on the other Rs. 4.90 billion of the six and twelve month T-Bills were auctioned off. The 5 and 10 year PIBs being sold at par while the 3 year paper was sold at a premium price of 100.04. The cut off yield for both the six and twelve month T-Bills was actually reduced by one and four basis points to stand at 11.54% and 11.99%, respectively.

The reduction of the cut-off yields in the T-Bill auctions and the 3-year PIB being sold at premium may make people wonder if the authorities are actually following the global trend of interest rates. However, we feel that such a scenario could certainly not be the case that can hold true in the near medium term for Pakistan. Occasional reductions in the cut-off yields do not constitute anything out of the ordinary and maintaining interest rates with a tight money supply is actually what the authorities would have to do to protect the Pak rupee.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

12.25

12.25

08.25%

2 Year

12.50

12.50

09.25%

3 Year

12.75

12.75

10.00%

4 Year

12.90

13.00

10.25%

5 Year

13.00

13.25

10.75%

10 Year

13.50

13.50

11.25%

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AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Apr 18  T-BILL Apr 18 Apr 19
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs. 6,000 Mln  

Rs.7,300 Mln.

Rs.4,900 Mln



MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

06 Apr

3,710 Mln

T-Bill

13 Apr

500 Mln

T-Bill

19 Apr

5,200 Mln




REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

12.90

12.95

01.50

1 Week

12.50

12.50

06.00

1 Month

11.00

11.10

07.15

3 Month

11.25

11.15

06.90

6 Month

11.50

11.40

07.10

1 Year

11.65

11.65

N. A.




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

1 Month

12.00

12.10

07.50

2 Month

11.10

11.10

07.35

3 Month

11.25

11.20

07.15

4 Month

11.30