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Pakistan Money Market Review

Updated on July 28, 2001

Activity was conducted amid dry conditions in the money market. Interbank overnight rates were glued at the 12.95% and 13.00% level while one week activity was also witnessed at levels of 12.00% at the start and end of the week. The market remained short Monday to Friday but managed to square itself on Saturday. Discounting ranged between Rs. 7 billion and touched a colossal figure of Rs. 22.80 billion on Friday. The discounting of this magnitude did take the market by surprise but an even greater surprise came on Saturday on the market managing to square itself. According to unconfirmed reports on account of public sector bonds, national savings maturities and reserve averaging by banks were attributed for the market squaring off.

One month trades were reported in the band of 10.25% and 10.75% but amounts remained relatively thin. Three and six month trades were also hard to come by with banks preferring to take their chances in the Treasury Bill auction. The auction managed to attract a total amount of Rs. 26.91 billion against the target amount of Rs. 3 billion. The three, six and twelve month T-Bills saw a 66, 99 and 100 basis points reduction in the yields with the new cut-off being 11.46%, 11.60% and 11.99% for the respective papers. A total amount of Rs. 12.055 billion was accepted. The result of this auction did not come as a major surprise as market players compared it to the returns that were offered on the 31st May auction, that is when the discount rate stood at 13.00% as it does now. The SBP had reduced it by 100 basis points on the 19th of July. The other development in the primary market was the change in the status of the Open Market Operations. SBP decided on doing away with conducting OMOs every other Thursday. As witnessed this Friday, OMOs would be announced anytime during the week. This Friday, SBP offered to inject liquidity into the system for a tenor of one week. Rs. 1.10 billion at 10.00% was injected against a total requirement of Rs. 9.07 billion. The injection seemed like a drop in the and a total of Rs. 22.80 billion discounting was reported.

Recent regulatory changes have reflected that the Central Bank is now concentrating on bringing about further changes in line with a market based system both in the money and foreign exchange market. The announcement of the change in the nature of the OMOs, the past week, seems certainly in the right direction. This would also help in further controlling the liquidity in the market which in turn can help the authorities to check the continuous depreciating of the Pak rupee.

Federal Investment Bond

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THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

12.25

12.25

08.15%

2 Year

12.75

12.75

08.50%

3 Year

13.25

13.25

08.75%

4 Year

13.50

13.50

08.90%

5 Year

13.75

14.00

09.00%

10 Year

14.25

14.50

09.35%

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AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
July 25 T-BILL July 25 July 26
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.3,000 Mln.  

Rs.26,911 Mln.

Rs12,055 Mln.



MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

26 July

2,669 Mln




REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

12.90

12.90

00.88

1 Week

12.40

12.25

06.13

1 Month

10.50

10.50

07.00

3 Month

10.95

10.55

07.10

6 Month

11.25

11.30

07.30

1 Year

11.65

11.90

N.A




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

1 Month

11.25

11.50

07.50

2 Month

10.90

10.80

07.30

3 Month

11.10

10.75

07.25

4 Month

11.20

10.90

07.25

5 Month

11.30

11.40

07.30