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Pakistan overnight rates stay high despite injection

Written by: Staff
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KARACHI, Apr 5 (Reuters) Pakistan's central bank on Wednesday injected 16.15 billion rupees (8 million) into the money market through a three-day reverse repo, but dealers said the inflow failed to ease short-term money rates.

The State Bank of Pakistan said it offered a 8.37 percent annual interest rate on the three-day government papers in an open market operation.

Banks had offered bids worth 34.60 billion rupees in the auction, it added.

Dealers said the injection did not affect overnight rates, which closed at the top level of 8.9 percent as an outflow of 9.5 billion rupees offset the impact of injection.

''The rates failed to decline because the injection was not up to market requirements,'' said a dealer at a local bank. ''The market is still short of liquidity.'' Treasury-bill and bond markets were quiet because of high call rates, he said.

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

In the currency market the Pakistani rupee eased to 60.14/60.15 to the dollar, compared with 60.07/60.09 on Tuesday.

Dealers foresaw the rupee weakening in the days ahead due to rising dollar demand from importers. Last month, the rupee hit a 16-month low of 60.19, but recovered on improved dollar supplies.

Wednesday Previous Interbank market 60.14/60.15 60.07/60.09 Open market 60.15/60.20 60.25/60.30 For Karachi Interbank Bid Rates: click on page Revaluation rates by Financial Market Association for Treasury Bills, PIBS, FIBs Holding: click on page Revaluation rates by banks for PIBs: click on For Treasury Bonds chain: click on page <0#PKTSY> REUTERS CS HT1642

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