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Updated on Dec 29, 2001

The interbank money market geared up for the year end and experienced up a soft stance with overnight rates at rock bottom levels of 1.50% and 2.00%. Excess liquidity in the market kept the number of banks long, majority of the market place showing a sign of comfort. However, some banks were willing to pay premium for borrowing funds over the 31st December. In fact one week trades were witnessed as high as 8.50% with overnight rates at 2.00%. This shows the sentiments of some players in the market, who didn't wanted to take any risk this time.

The term market which was already under pressure since the previous week reflected the same scenario with three and six months offers falling to as low as 7.50% and 7.75%. This drastic fall was seen after the T-Bill auction result in which the State Bank further cut the cut-off yields by 9 to 10 basis points. This week the State Bank announced PIB and T-Bill auction and received total bids of Rs 26 billion in PIB auction in which the SBP accepted Rs 10.40 billion at the cut off level standing at 100.35. Aggressive bidding was witnessed in the T-Bill auction with the six month paper being the center of attention. The State Bank accepted a total amount of around Rs 9 billion, much more lower than the targeted amount of Rs 24 billion, with the cut-off being 7.64%, 7.98% and 8.40% for three, six and one year paper. This week heavy activity was seen in PIBs after the news that the SBP has allowed investment banks to avail discounting facilities. Investment Banks aggressively came forward to buy PIBs and trades in ten year PIB latest issue were seen as highas 102.50 and in five year PIB as highas 101.15.

As the excess liquidity in the interbank money market kept the rates at the lower side of the yield curve, the market is of the view that there will be no liquidity crunch at the year-end. As the government has reduced the refinance rate by 50 basis points there is a strong feeling of further downward adjustment of discount rate and we foresee further cut in TBill yield in days to come.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

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THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

08.40

08.75

12.25%

2 Year

09.25

09.35

12.75%

3 Year

10.75

10.75

13.35%

4 Year

11.00

11.00

13.50%

5 Year

11.25

11.25

14.00%

10 Year

12.25

12.25

14.75%

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AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Dec 26 T-BILL Dec 26 Dec 27
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.24,755 Mln Rs.20,137.3 Mln Rs.9,760.3 Mln



MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

13 Dec

3,030 Mln

T-Bill

27 Dec 

18,300 Mln




REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

06.00

06.25

13.00

1 Week

08.50

06.50

19.00

1 Month

07.55

07.50

14.50

3 Month

07.30

07.50

12.20

6 Month

07.60

07.95

11.75

1 Year

08.10

08.30

12.25




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

1 Month

07.90

07.90

15.50

2 Month

07.40

07.65

12.80

3 Month

07.35

07.65

12.30

4 Month

07.50

07.75

12.10

5 Month

07.60

08.90

11.80