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Pakistan Money Market Review

Updated on Aug 04, 2001

The interbank money market moved between wide bands amid inflows in the later half of the week. Even with the market squaring off early in the week, the overnight rate remained glued at the 12.90% level. Uncertainly in the market regarding liquidity also caused the one-week level to remain above 12.00%. The market eased off and caused overnight rates to fall as low as 3.00% only after the Rs. 6.0 billion OMO maturity on 2nd August. In the absence of a fresh OMO, against expectations, the one and two week repo market also fell sharply with activity in the band of 6.75% and 9.00%. However, trades at the lower end of the spectrum in the one week tenor were only witnessed on the weekend.

The absence of the OMO this week did somewhat come as a surprise, keeping in mind that the market was fairly long even prior to the maturities in the market. The one month repo rate did ease off and fall into single digit levels from the bid and offer of 10.20% and 10.50% early in the week. Rates fell to as low as 8.90% with amounts trading mostly in between 8.75% and 9.35%. However announcement of the 10 year Pakistan Investment Bond auction, scheduled for the 15th and settlement on the 16th of this month, kept rates from falling further and bids and offers were available at 8.75% and 9.00% on the weekend. The pre-auction target of Rs. 10 billion also kept rates firm in the two month tenor, the maturity of which falls in the next quarter with nominal activity conducted in between the range of 9.75% and 10.20%. Heavy activity was witnessed for outright T-Bills. The pressure was evident on the buying side with buyers, upon seeing rep levels easing picked 6 months T-Bills initially at 11.25% and later at 10.90% as well. However, papers maturing in January 2002 were traded above the 11.00% level.

Trading in outright T-Bills witnessed this week certainly reflects significant interest in the forthcoming T-Bills auction. We feel that participation would be concentrated for the six-month paper while a downward adjustment in the yield on the three-month paper is likely. As far as the PIB auction, ten days away from now, is concerned, buyers will certainly be willing to buy the paper at slight premiums while majority bids are expected at par.

Federal Investment Bond

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

12.00

12.25

08.15%

2 Year

12.50

12.75

08.50%

3 Year

13.00

13.25

08.75%

4 Year

13.25

13.50

08.90%

5 Year

13.50

14.00

09.00%

10 Year

14.00

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

09 Aug.

7,352 Mln

T-Bill

23 Aug.

5,652 Mln




REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

04.00

12.90

10.95

1 Week

06.50

12.40

09.00

1 Month

09.00

10.50

08.13

3 Month

10.20

10.95

07.38

6 Month

11.00

11.25

07.48

1 Year

11.50

11.65

N.A




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

1 Month

09.75

11.25

08.80

2 Month

10.40

10.90

07.70

3 Month

10.50

11.10

07.60

4 Month

10.70

11.20

07.55

5 Month

10.90

11.30

07.50