Updated on Oct
20,
2001
The interbank money market was glued at the higher
end of the spectrum throughout the past week. The State Bank injected
liquidity from time to time but the market continued to experience a
crunch that caused banks to approach the repo discount window to meet
their requirements. In the primary market the Treasury Bill auction
reflected the continued sentiment of expectations of a discount rate cut
as banks placed their bids at significantly low levels.
Overnight trading was witnessed between wide bands
but the market continued to close at the 11.90% early in the week. SBP
did match OMO maturity outflows with fresh injections but there was no
marked change in the liquidity status of the market which remained
short. It was only after the colossal discounting of Rs. 20.50 billion
on Friday that compelled the authorities to announce another OMO for
Saturday which did ease of overnight and one week levels. SBP injected
Rs. 12.50 billion for one week at 10.00% and the second OMO of the week.
Prior to this Rs. 7.30 billion was also injected on the 17th. The
overnight market eased and touched a low of 4.00% but closed at 8.00% on
Saturday. One week rates which had touched as high as 10.50% prior to
the injection later fell into single digits to close in between the band
of 9.50% and 9.75%.
Participation in the T-Bill auction was unexpected as
SBP managed to attract funds against the six month paper at levels close
to the previous three month paper cut-off yield of 10.22%. SBP rejected
the single bid for the three month paper and accepted Rs. 500 million
and Rs.3.05 billion for the six and twelve month papers, respectively.
The cutoffs were brought down to 10.29% and 10.79%, that reflected a
reduction of 22 and 12 basis points for the six and twelve month papers,
respectively. Brisk trading was witnessed in the term market the past
week with heavy amounts being dealt in the three month tenor. Both call
and repo trades were conducted at levels in between 10.00% and 10.25%.
Trades in the market were conducted both from the auction settlement day
and from the 1st of November.
The auction the past week yet again reflected that
market players do expect a downward adjustment in the discount rate by
at least 50 basis points i.e. down to 11.50% from the current 12.00%
level. However no direct indications of such a move were witnessed from
the Central Bank.
| YIELD PROFILE |
FEDERAL INVESTMENT BONDS |
| . |
THIS
WEEK |
1
WEEK AGO |
1
YEAR AGO |
|
1 Year |
11.00 |
11.00 |
12.50% |
|
2 Year |
11.50 |
11.50 |
13.00% |
|
3 Year |
12.00 |
12.00 |
13.75% |
|
4 Year |
12.50 |
12.50 |
14.00% |
|
5 Year |
12.75 |
12.75 |
14.50% |
|
10 Year |
13.50 |
13.50 |
15.00% |
| AUCTIONS |
| BID
DATE |
INSTRUMENT |
RESULT |
SETTLEMENT |
| Oct
17 |
T-BILL |
Oct
17 |
Oct
18 |
| TARGET AMOUNT |
BID AMOUNT |
ACCEPTED AMOUNT |
| Rs
6,750 Mln |
Rs. 13,350 Mln |
Rs.3,550
Mln |
|
|
| MATURITIES |
INSTRUMENT |
DATE |
AMOUNT |
|
T-Bill |
04 Oct |
3,960 Mln |
|
T-Bill |
18 Oct |
3,600 Mln |
|
|
|
REPO RATES |
|
THIS WEEK |
1 WEEK AGO |
1 YEAR AGO |
|
Overnight |
07.00 |
08.50 |
12.95 |
|
1 Week |
09.75 |
09.25 |
12.95 |
|
1 Month |
09.70 |
09.50 |
12.15 |
|
3 Month |
09.90 |
09.90 |
11.70 |
|
6 Month |
10.25 |
10.25 |
11.65 |
|
1 Year |
10.60 |
10.60 |
12.50 |
|
|
|
| TREASURY
BILL RATES |
| MATURING |
THIS WEEK |
1 WEEK AGO |
1 YEAR AGO |
|
1 Month |
10.75 |
10.50 |
13.15 |
|
2 Month |
09.80 |
09.90 |
12.20 |
|
3 Month |
09.90 |
10.00 |
12.25 |
|
4 Month |
10.00 |
10.10 |
12.30 |
|
5 Month |
10.15 |
10.25 |
12.35 |
|
|
