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Pakistan Money Market Review

Updated on May 26, 2001

The interbank short term market remained well within the single digit bands with overnight activity mostly witnessed in between wide bands of 5.00% and 9.00%. Presence of excess liquidity was the primary reason for this sentiment that prevailed in the market. The authorities managed to suck out funds from the system by way of the weekly OMO on Thursday but rates still maintained a similar trend. It was only on Friday that rates crossed the double digit mark and closed at 12.95% with banks having to approach the central bank for respite. The discounting of Rs. 3 billion did not have much bearing on Saturday and rates fell with overnight trades being reported as low as 7.00%. It was the one and two week market that also fell off sharply and trades were witnessed at levels of 8.75% and 9.50% in the respective tenors.

The term market was relatively active with volatility persisting. Yet again it was in the one month tenor in which most of the trades were conducted. Rates seesawed between 10.25% and 11.00%. Most of the activity that was conducted in the one month tenor was on Thursday and was related to the participation and the result of the OMO. It was the unconfirmed news of the participation of Rs. 17 billion which initially caused the one month level to rise sharply and touch 11.00%. Prior to this news trades were conducted at 10.50%. However only Rs. 9.10 billion was accepted which only caused a net outflow of approximately Rs. 4.20 due to the OMO maturity the same day. This caused rates to fall back again with one month levels falling back to 10.40% at which trades were witnessed. The interesting aspect that was witnessed at the end of the week was the lending pressure that was evident in the two month tenor. Banks willing to cross the June 30th placed their two month funds at levels as low as 11.10%. The three and six month repo tenors were inactive throughout the week. Partial interest was witnessed in the three month tenor with bids and offers at 11.05 % and 11.25% but trades were scarce while six month repo offers remained unchanged at levels of 11.55%.

The OMO conducted the past week did cause market players to feel that a relatively large amount could be mopped up by jacking up the rates. This sentiment was primarily related to the falling value of the Pak rupee but it seemed that yet again SBP refused to entertain. In fact lending pressure evident in crossing June 30th at the end of the week also makes us continue to suggest that no major hike in interest rates is to be witnessed.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 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

10.00%

10 Year

13.50

13.50

10.75%

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AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
May 16 T-BILL May 16 May 17
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.3,650 Mln  

Rs.5,450 Mln

Rs.4,650 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

07.50

06.00

08.00

1 Week

09.00

07.00

06.00

1 Month

10.25

10.00

07.00

3 Month

11.15

11.00

07.15

6 Month

11.35

11.30

07.20

1 Year

11.65

11.65

N.A




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

1 Month

11.25

11.00

07.50

2 Month

11.10

11.00

07.45

3 Month

11.00

10.90

07.40

4 Month

11.10

11.00

07.35

5 Month

11.35

11.30

07.30