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Updated on June 08, 2002

The interbank market continued to face the liquidity crunch that has been persisting for nearly one month now. Continuous SBP intervention by way of OMO injections in the money market did bring relief early this week as well, but towards the end, rates moved back to the higher end of the spectrum and banks had to resort to the discounting facility on Friday. The term market was unmoved and the bullish sentiment prevailed with banks covering themselves clean in longer tenors of six months.

The State Bank maintained its policy of providing respite on the day of the OMO maturity outflows by re-injecting liquidity in the system. However the central bank stuck to the one and two week tenors in which a total of Rs. 20.35 billion resulting in the overnight levels to crash and fall to the 2.00% mark. The short term market took a turn later in the week and rose back to the 8.90% with trades between wide bands of 7.00% and 8.90%. OMO maturity outflows coupled with payments to the government on account of privatization funds were reported from the system that causes the market to hike up. One and two week rates did ease off considerable after the OMO and touch 4.50% and 5.25% but also rose to cross the 6.50% SBP OMO level. Further outflows are due next week that saw the rates in these tenors rising. Longer tenors of three and six months also maintained an upward trend with the sharp hike witnessed for funds in call. Trades were reported as high as 7.00% and 7.60% in the respective tenors. The announcement of the 10 Year PIB auction did cause activity to take place but the interest was light. Trades were reported as high as 102.50 but prices fell off to around 101.50.

We feel that the market will remain volatile across the board as witnessed the past week. Another intervention by the State Bank is likely on Monday as Rs. 20 billion is expected to flow out from the system. Chance of increasing the tenors from two week to three weeks is sure to provide a breather to banks which would be looking to cross the 30th of June seem bright.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

07.35

07.25

12.75%

2 Year

08.45

08.25

13.25%

3 Year

08.85

08.75

13.50%

4 Year

09.00

09.00

13.75%

5 Year

09.85

09.75

14.00%

10 Year

10.85

10.70

14.50%




AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
May 29 T-BILL May 29 May 30
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.12,000 Mln. Rs.14,650 Mln. Rs.9,300 Mln.

  


MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

13 Jun

7,850 Mln.
T-Bill 27 Jun 9,350 Mln



REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

07.50

08.00

13.90

1 Week

06.75

07.40

13.00

1 Month

06.65

06.50

13.25

3 Month

06.35

06.30

12.20

6 Month

06.60

06.60

12.35

1 Year

07.00

07.00

12.55




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

1 Month

07.00

07.00

14.25

2 Month

06.80

06.80

12.20

3 Month

06.35

06.40

12.00

4 Month

06.40

06.50

12.10

5 Month

06.50

06.60

12.20