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Pakistan Money Market Review

Updated on Aug 25, 2001

The interbank market was gripped with primary market activity. The Pakistan Investment Bond and the Treasury Bill auctions were the first after the downward adjustment of 1.00% in the SBP repo discount rate. On one hand the T-Bill auction saw an amount six times the size of the Rs. 5.6 billion being bid while on the other the PIB auction was unable to even attract the target amount of Rs. 10 billion. After the acceptance of a total amount of Rs. 23.796 billion in both the auctions the overnight market took a turn from the pre-auction levels of 2.00% and 3.00% and touched the 11.90% level, with the market closing short. Discounting to the tune of Rs. 1.50 billion was witnessed on Friday and Saturday. The short term market was volatile with one and two week tenors trading in between wide bands. Levels of 5.00% and 7.00% were witnessed in the respective tenors prior to the auction, while later on news of the market short on Friday, one week trades were reported as high as 10.50%. Heavy activity was also conducted in term market with banks taking advantage of single digit offers of 8.25%, 8.80% and 9.25% in the one, two and three month tenors. Significant interest and simultaneous trades were also reported in call transactions. Banks picked up call funds for three months below the new cut-off level while six month call funds were also picked up at levels close to the six month T-Bill auction yield. The PIB auction could only muster a total amount of Rs. 8 billion with majority of the amount being bid at discount. SBP again took the market by surprise and sold the 10 year paper at a discount price of 99.80, with the sale amount of Rs. 6.746 billion. Aggressive bidding was witnessed in the T-Bill auction with the three month paper being the center of attention. Buyers quoted bids as low as 9.60%, 10.40% and 10.80% for the three, six and twelve month T-Bills, respectively. SBP accepted a total amount of Rs. 17.05 billion, three times the target amount, with the cut-offs being 10.23%, 10.51% and 10.88% for the three papers.

Statements by the money managers of the country regarding the foreign exchange reserves position and the benefits to the economy and industry with low interest rates can also be heard. The participation in the Treasury Bill auction coupled with the activity in the term repo market, the past week, does seem to reflect that chances of another downward adjustment in the discount rate cannot be totally ruled out for the time being.

Federal Investment Bond

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

11.00

11.25

08.25%

2 Year

11.50

11.60

08.50%

3 Year

12.00

12.00

09.00%

4 Year

12.25

12.25

09.50%

5 Year

12.50

12.50

09.65%

10 Year

13.00

13.25

09.75%

 


 

AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Aug 22 T-BILL Aug 22 Aug 23
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.5,600 Mln.  

Rs.32,354 Mln.

Rs.17,050 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

11.90

02.75

08.00

1 Week

10.25

04.63

06.75

1 Month

09.25

07.50

07.00

3 Month

09.50

09.25

07.10

6 Month

10.00

09.93

07.45

1 Year

10.50

10.68

07.90

 


 

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

I Month

10.00

08.50

07.90

2 Month

09.60

09.00

07.35

3 Month

09.90

09.50

07.40

4 Month

10.10

09.75

07.45

5 Month

10.20

10.15

07.50