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Pakistan Money Market Review

Updated on Feb 05, 2001

The short term market maintained a soft tone throughout the past week. The overnight market slid to as low as 1.00% towards the weekend. The outflow of Rs. 12.35 billion on Thursday on account of the OMO did not cause any major jolts in the market which remained well around 2.00% and 3.00% level. This trend after the OMO acceptance was unanticipated as one and two week rates jumped up and trades war conducted as high as 7.00% and 8.50 before falling back to 6.00% and 7.50% % in the respective tenors.

The term market remained active with most of the activity being conducted in the one month tenor. Trades were reported between the band of 8.75% and 9.50%. Trades at the lower end were witnessed early in the week but offers soon moved upwards as the OMO drew nearer. The result did cause a furor of activity in between 9.00% and 9.50%. However rates came under pressure once again with trades being witnessed yet again at 8.755. Two and three month rates maintained firm with offers being squared off on falling below 11.00%. Nominal to moderate amounts traded in the two and three month tenor at levels close to 10.75%. However, these levels did rise but marginally, to touch 11.00% only to be seen falling back after Thursday. The OMO, two way in nature, saw a total acceptance of Rs. 12.35 billion with Rs. 9.35 billion and Rs. 3.0 billion being picked up in the 2 week and 6 week tenors with the cut-offs being 9.00% and 9.50%, respectively. The ease of term levels earlier in the week caused brisk activity in T-Bills. Four months to maturity T-Bills were traded initially at yields close to 11.50% while later buyers also purchased them at yields of 11.25%. The announcement of another PIB auction for this month, earlier scheduled for March, caused prices to come off sharply. The 30/12/00 10 yr. PIB having traded at premiums close to 110 b.p.s. saw prices falling off sharply in the wake of the February 14th auction target of Rs. 8.0 billion. Buyers for the 30/12/01 and gray market quotes for the 14/01/01 issue at 100.40 and 100.20 towards the end of the week.

It seems that the Central bank is now in a comfortable situation, having managed to accept amounts in the OMO and also being able to keep rates under control. We expect short term rates to maintain the soft stance keeping in mind that commodity inflows do generally start in the month of February with a slight upward sentiment as the auction draws nearer. Term marked levels prevailing in the market do suggest that the authorities may easily manage to maintain the yields in the T-Bill auction or may even reject bids keeping in mind that no major T-Bill maturities are falling next week.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

11.80

12.15

08.75%

2 Year

12.60

12.70

09.50%

3 Year

13.00

13.00

10.00%

4 Year

13.00

13.00

10.25%

S Year

13.25

13.25

10.75%

10 Year

13.50

13.50

11.25%

.


AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Jan 24 T-BILL Jan 24 Jan 25
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.11.407 Bln.

Rs.9.201 Bln.

5.353 Bln



MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

08 Feb

150 Mln

T-Bill

22 Feb

1250 Mln




REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

04.50

03.50

02.50

1 Week

05.50

06.00

05.75

1 Month

08.75

09.50

07.60

3 Month

10.75

11.25

07.75

6 Month

11.50

11.75

08.00

I Year

11.80

12.00

N. A.

 



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

1 Month

09.75

10.50

07.50

2 Month

11.00

10.75

07.70

3 Month

11.10

11.25

07.80

4 Month

11.20

11.40

08.00

5 Month

11.40

11.60

08.05