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Pakistan money market rates firm, to remain high

Written by: Staff

KARACHI, Apr 4 (Reuters) Pakistan's short-term money rates remained firm on Tuesday due to the lingering effects of a government auction last week and were likely to remain high in the next few days due to a shortage of funds, dealers said.

The overnight market traded at 8.9 percent throughout the day, unchanged from the previous close and just below the discount rate of 9.0 percent.

A dealer said banks had approached the central bank's discount window to borrow over 6.5 billion rupees at the end of the day.

Banks can borrow money from the State Bank of Pakistan's discount window under a three-day repo facility if there is a shortage of funds in the inter-bank market.

''The market does not expect much of a change in the liquidity profile and the rates are expected to remain firm because no inflows are due this week,'' he added.

The overnight market had turned bullish after 37.46 billion rupees were taken out of the banking system in settlement of an auction of three-, six- and 12-month treasury bills last week.

In the currency market the Pakistani rupee eased to 60.07/60.09 to the dollar, compared with 60.04/60.06 on Monday.

Dealers foresee the rupee shedding some value in the days ahead due to rising dollar demand from importers. But they say healthy dollar inflows from exporters' sales and Pakistanis working abroad would prevent a sharp fall in the rupee.

Last month, the rupee hit a 16-month low of 60.19 to the dollar, but recovered on improved dollar supplies.

Tuesday Previous Interbank market 60.07/60.09 60.04/60.06 Open market 60.20/60.25 60.25/60.30 REUTERS RL KP1733

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