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Updated on Apr 27, 2002

The money market went through a volatile phase the past week with trading being conducted between wide bands. The PIB auction of the month was also conducted and the authorities restricted themselves to picking up the target amount. This did not result in any major shift in prices of bonds and also there was not major shift in term repo market after the outflow of funds from the market.

The overnight market at the start of the week was at the lower end of the spectrum but gradually picked up and maintained an upward trend. Overnight activity at 2.00% and 3.00% was witnessed but rates took a turn on Friday and touched the 8.90% level. However the very next day rates crashed and the market closed back at the 1.00% level. In fact the crash was so sudden that one and two week trades were conducted as low as 2.00% and 3.50% respectively. The term market was relatively quiet the past week with most of the activity witnessed in the shorter tenor of one month. Heavy trading was conducted from the 2nd of May, the day of the next T-Bill auction, in the as the repo maturity was crossing the financial year end. Initially trades were reported at 5.60% and lowest at 5.25% in the two month tenor while three month bids and offers stood at 5.50% and 5.90%, respectively while six month repo trades were hard to come by. On the other hand banks did enter into the outright T-Bill market and one year papers changed hands. Papers maturing in February and March 2003 were traded in the narrow band of 6.70% and 6.80%. The 10-year PIB auction attracted a total amount of 8.47 billion but the State Bank accepted Rs. 3.007 billion at a cut-off price of 102.55. The result did not come as much of a surprise as the paper had already traded at as high as 103.30.

The market sentiment has turned significantly bearish as witnessed from the one and two week activity that was conducted on Saturday. Such instances have resulted in the State Bank calling an MOOD. However we feel that chances are slim that might happen early this week. Furthermore chances of another slight downward adjustment in the T-Bill yields in the coming auction do seem bright.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

07.00

06.90

12.00%

2 Year

08.00

07.50

12.35%

3 Year

08.40

08.40

12.50%

4 Year

08.40

08.40

12.50%

5 Year

09.40

09.40

13.00%

10 Year

10.65

10.40

13.50%




AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
April 17 T-BILL April 17 April 18
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.3,000 Mln Rs.6,150 Mln. Rs.19,500 Mln

  


MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

04 April

6,450 Mln.

T-Bill

18 April

7,300 Mln.



REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

01.00

02.50

12.90

1 Week

02.00

03.75

08.75

1 Month

08.88

05.00

10.00

3 Month

05.58

05.65

10.90

6 Month

06.10

06.15

11.30

1 Year

06.70

06.55

12.00




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

1 Month

05.85

05.50

11.00

2 Month

05.50

05.35

10.85

3 Month

05.65

05.65

10.90

4 Month

05.90

05.85

11.00

5 Month

06.10

06.05

11.20