FINEX WEEK

 

 

By SHABBIR H. KAZMI
Updated July 31, 2004

 

Contrary to expectations, inflow of Rs.40bn didn't ease the money market and rates continued to remain at the high level throughout the week. The Central Bank conducted Open Market Operation on Wednesday, July 28, 2004 and mopped up Rs.20bn in four-week at 1.69%.
Volatility was seen in the money market where overnight funds traded in the wide band of 2.50% to 7.00% throughout the week. However, overnight

 

 

activity for most part of the week was ~ seen above 5.00%. One and two-week trades were witnessed between 3.25% and 2.50% respectively. Borrowing interest in one and three-month was seen at 2.10% and 2.20% while offers were available at 2.30%. Deals were executed at 2.10% and 2.25% in one and three-month respectively. Market participants were also seen active in six-month call with bids quoted at 3.00% against offers at 3.25%.

Banks were reluctant to quote rates for T-bill in the secondary market due to upward trend where the repo rates were higher than the existing T-bill cut-off. Moreover, the upcoming auction of three and one-year T-bill next week also resulted in lack of in T-bill.

Selling pressure continued in the bond market at the start of the week and papers with seven to eight years to maturity traded at 8.80% while the latest ten year bond traded at 8.65%. Demand at the end of the week however changed the market scenario and downward trend was observed in all papers. Eight years to maturity papers were traded at 8.30% while the latest ten-year bond started around 8.65% and then dropped to 8.25% and 8.10% as the week progressed. At close of the week, bids in the latest ten - year bond were quoted at 8.25% and 8.15%

Future outlook The upcoming T-bill maturity of Rs.101.00bn is likely to ease-off the overnight and short term rates. Three and one-year T-bill auction is also due in the coming week. Heavy participation is expected in three month T-bill and it is also expected that the SBP will raise 20 to 30 basis points cut-off yield.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

03.80

03.80

01.65%

2 Year

05.45

05.75

02.10%

3 Year

05.75

05.95

02.50%

4 Year

06 50

06.90

03.00%

5 Year

06.65

07.00

03.65%

10 Year

08.45

08.40

04.70%

 

 

 


 

AUCTIONS

BID DATE

INSTRUMENT

RESULT

SETTLEMENT

Jul 21 T-Bill 03 mth. Jul 21 Jul 22

TARGET AMOUNT

BID AMOUNT

ACCEPTED AMOUNT

Rs.70,000 Mln. 

Rs.97,785 Mln. 

Rs.67,750 Mln

 


 

MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

08 July

78,200 Mln.

 

 

 


 

REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

02.50

07.20

00.25

1 Week

02.00

02.75

00.50

1 Month

02.00

02.00

00.65

3 Month

02.10

02.15

00.90

6 Month

02.40

02.50

01.50

1 Year

02.70

03.00

01.50

 

 

 


 

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

1 Month

02.20

02.30

00.80

2 Month

02.25

02.15

00.85

3 Month

02.20

02.25

00.90

4 Month

02.45

02.35

00.90

5 Month

02.50

02.50

00.95