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Updated on June 22, 2002

The interbank market went though another week of uncertainty following the federal budget. Outflow to the tune of Rs. 16 billion did not cause any ripples in the market which infact gradually took a turn and eased off considerably. Amid rumors of a discount rate cut, term repo rates fell off sharply and prices of PIBs reflected a bullish sentiment.

The market reacted adversely on the outflow on Monday and rates fell off sharply. Overnight activity throughout the past week was at the lower end but rates oscillated between 1.50% and 4.00%. One week activity was reported at lows and highs of 3.50% and 5.50% respectively. Banks were also witnessed covering themselves for two weeks that crossed their positions over June 30th with activity between a wide band of 4.00% and 5.75%. Excess liquidity in the system continued to be the main reason behind rates falling in the short term market. However, it was the long term bond market that stole the show. The State Bank auctioned off Rs. 4.88 billion of the 10 Year PIB against a total participation of Rs. 11.55 billion at a premium price of 100.61. The 18th of June was not only the issue date for the auction of 10 year PIB. The State Bank finally issued the much spoken of PIBs against the outstanding advance tax payments made by the financial institutions to the Central Board of Revenue. A total amount of Rs. 22 billion of the 3, 5 and 10 year PIBs were issued at prices of 100.40, 100.75 and 100.81, respectively. Most of the foreign banks took profit and offset their 10 year risk at prices of 100.40. This caused the price to fall back, only to be seen shooting up sharply and finally touched a high of 103.00 on the weekend. Rumors of a discount rate cut were the apparent reason for this hike in the bond prices. One year T-Bills also changed hands and offers at levels of 6.80% were soon squared off. Some activity was also reported at lower levels.

There was no news of any downward adjustment in the discount rate in the dealing hours of Saturday but we feel that chances do seem bright of such a change taking place.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

06.80

07.00

13.00%

2 Year

07.80

08.10

13.50%

3 Year

08.40

08.75

14.00%

4 Year

09.00

09.00

14.25%

5 Year

09.40

09.75

14.50%

10 Year

10.50

10.85

15.00%




AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Jun 12 T-BILL Jun 12 Jun 13
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.7,000 Mln. Rs.6,850 Mln  Rs.4,300 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

04.25

03.00

01.75

1 Week

05.00

04.25

06.50

1 Month

05.75

05.25

12.25

3 Months

05.65

05.85

12.25

6 Months

06.05

06.25

12.50

1 Year

06.80

06.85

12.70




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

1 Month

06.00

05.75

13.25

2 Month

05.75

05.70

12.10

3 Month

05.65

05.85

12.00

4 Month

05.85

06.05

12.10

5 Month

06.00

06.15

12.40