Pakistani banks forced to visit discount window

KARACHI, Apr 24 (Reuters) Pakistani short-term money rates remained firm on Monday, and dealers said a shortage of funds forced the central bank to announce a small target for its Treasury bill auction later this week.

The State Bank of Pakistan has announced that it will sell 3.0 billion rupees of its three-, six- and 12-month T-bills on Wednesday, with settlement due the following day.

Overnight call rates closed unchanged at 8.9 percent, just below the discount rate of 9.0 percent at which banks borrowed 9.305 billion rupees from the central bank under a three-day repo facility.

''The market will remain tight for the coming weeks, as no major cash inflows are due,'' said a dealer at brokers Invest Capital and Securities.

''For the next month or so, it will depend on central bank injection and discounting,'' he said.

Dealers said there was an inflow of around 3.75 billion rupee on Thursday, against which the central bank had set the auction target.

''But there is an outflow of 14 billion rupees around the same time, so we may see the auction falling short of target,'' said a local bank dealer.

''Also, in such a situation, rates are unlikely to fall.'' The interbank money market has remained tight in the last couple of weeks, keeping short-term money rates at high levels.

The shortage of funds has also forced banks to borrow from the central bank's three-day repo facility, or discount window.

In the currency market, the Pakistani rupee ended flat against the dollar, but dealers expected it to ease in coming days due to import payments.

The rupee closed at 59.99/60.01 per dollar, unchanged from Saturday.

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

Dealers said the rupee was expected to ease to between 60.00 and 60.10 in the near term.

Monday Previous Interbank market 59.99/60.01 59.99/60.01 Open market 60.20/60.25 60.20/60.25 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 REUTERS ARB HS1526