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Pakistan Money Market Review

Updated on May 12, 2001

A tight money market was the highlight of the past week. Overnight rates glued to the 12.95% level and banks availing the repo discounting facility was witnessed throughout the week. Reserving averaging of the cash reserve ratio caused the discounting figure to vary from Rs. 4.60 billion to Rs. 9.80 billion on Friday. However the market managed to square itself on Saturday with banks reported to have closed long. Initial trades were conducted at 12.90% but towards the end offers were reported to have fallen off to 11.00%. This ease did come as a surprise. It were the trades in the one week and two week tenor as high as 12.50% that caused players to wonder anxiously about this unexpected change.

Players in the repo tenor were interested mostly in the one month tenor which remained volatile. Activity at 11.25% was nominal but offers soon moved up to 11.75% while trades were conducted at 11.50% as well. This trend continued till the end of the week with activity within the narrow band of 11.50% and 11.75%. However the amounts traded in between these levels were nominal. Three month and six month repo trades were hard to come by and offers remaining close to the T-Bill cut-offs. Borrowers on the other hand generally preferred to reflect their interest in call transactions, as premiums were relatively lower than usual. Three month activity was conducted at around 12.00% while six month call trades was also reported to have been witnessed at levels close to 12.30%. The OMO, falling during this week. was conducted with the authorities only announcing two, four and eight week repos. Participation was reported to have been mostly in the eight week tenor but SBP rejected all bids received.

The announcement of a one way OMO in a short market continues to reflect the sentiment that the authorities are destined to follow. Maturities coupled with two primary activities in the shape of the T-Bill and the PIB auction are due next week. The target of the PIB auction Rs. 3 billion a similar target expected for the T-Bill we feel that the authorities will manage achieve the target amounts for both the GoP debt instruments.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

I Year

12.25

12.25

08.00%

2 Year

12.50

12.50

08.75%

3 Year

12.75

12.75

09.25%

4-Year

12.90

12.90

09.50%

5 Year

13.00

13.00

09.75%

10 Year

13.50

13.50

10.75%

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AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
May 02 T-BILL May 02 May 03
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs. 10,550 Mln  

Rs.27,220 Mln.

Rs.21,670 Mln



MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

03 May

10,550 Mln

T-Bill

17 May

3,650 Mln

T-Bill

31 May

8,835 Mln




REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

11.00

12.90

10.90

1 Week

12.00

11.00

09.00

1 Month

11.50

10.75

07.25

3 Month

11.20

11.00

07.25

6 Month

11.40

11.30

07.15

1 Year

11.75

11.65

N.A




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

1 Month

12.50

11.75

07.75

2 Month

11.40

11.30

07.30

3 Month

11.15

11.00

07.20

4 Month

11.20

11.10

07.25

5 Month

11.40

11.30

07.25