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Pakistan Money Market Review

Updated on Jan 15, 2001

The interbank market remained well around the 12.95% level throughout the past week. The market still under the influence of the liquidity crunch continued to close short throughout the week. However with the T-Bill auction being scrapped and banks having to maintain the Cash Reserve Requirement at 5%, the discounting figure fell to as low as Rs. 3.50 billion as the weekend drew nearer. Overnight rates did ease off to 12.00% on Thursday but soon rose back and closed at 12.95% at the end of the day. A similar trend was witnessed on both Friday and Saturday. However, it was on Saturday that overnight levels did even fall to as low as 8.50% only to be seen jumping back to 12.00% towards close with no reports of banks approaching SBP for respite. This being due to the inflow of Rs. 5.70 billion OMO maturity on Saturday.

Term repo activity was brisk throughout the week. Yet again the trend in the term market was upward with significant amounts trading in the three and six month tenors. Even after the rejection of all bids in the T-Bill auction rates continued to rise with banks primarily covering their quarter end positions. Initial activity in three months was witnessed at 12.00% with rates soon rising sharply. Trades were conducted as high as 12.45% with the underlined securities in these repos being FlBs while against T-Bills trades were highest at 12.30%. Six month trades were also reported at 12.50% with amounts being nominal. Three and six month trades in call were witnessed at 14.25% and 14.75% with offers later rising sharply. SBP rejected the entire amount of Rs. 2.75 billion bid in the T-Bill auction as bids quoted at significantly higher levels. Besides trades for the 30th December 10 Yr. PIB in between prices of 100.30 and 100.55, large amount were also traded in four to six months to maturity. These FIBs were traded in between the wide band of 11.90% and 12.50%.

The market having closed long with overnight trades between 8.50% and 12.50%, at around the 12.00% level on Saturday still depicts far from being liquid. Reserve averaging did provide some comfort to the borrowers on the first day of the reporting week. Foreign exchange swap maturities falling next week between the 16th and the 22nd are expected to cause an outflow approximately Rs. 8.0 bln, which is certainly keep rates towards the higher end. Furthermore the State Bank may have dispelled all rumors of a hike in the T-Bill yields by rejecting all bids in the auction, but chances of banks providing funds at previous cut-off levels in the current money market, still seem thin.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

I Year

12.50

12.05

10.50%

2 Year

12.75

12.80

11.00%

3 Year

13.00

13.50

11.50%

4 Year

13.25

13.75

11.75%

5 Year

13.75

14.00

12.50%

10 Year

14.50

14.75

13.00%

.


AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Jan 10 T-BILL Jan 10 Jan 11
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.8.930 Bln.

Rs.2.750 Bln.

Rejected



MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

11 Jan

8,450 Mln

T-Bill

25 Jan

6,600 Mln




REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

12.00

12.95

10.95

1 Week

12.00

l2.40

10.50

1 Month

12.00

12.00

09.60

3 Month

12.05

11.80

08.40

6 Month

12.20

11.75

08.90

1 Yeal

12.15

12.00

N. A.

 



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

1 Month

13.00

13.00

10.50

2 Month

11.90

11.75

09.30

3 Month

11.95

11.85

08.75

4 Month

11.90

11.80

08.80

5Month

11.85

11.75

08.90