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 |
|
|
