Pakistani o/n rates rise, banks go for discounting

KARACHI, June 15 (Reuters) Pakistan's short-term money rates rose on Thursday after the central bank mopped up 10.55 billion rupees from the market in a four-day repo operation, and dealers said rates were unlikely to fall any time soon.

Overnight call rates ended at the top level of 8.9 percent, up from 8.25 percent a day earlier.

A shortage of funds also forced banks to borrow 1.1 billion rupees from the State Bank of Pakistan's three-day repo facility, commonly known as the discount window, at 9.0 percent.

''There was some cash in the market, but most of it was mopped up by the central bank in the repo,'' said a local bank dealer.

''This forced the banks to go for discounting towards the end of the day.'' Dealers said banks were borrowing cash to meet weekly cash reserve requirement. Pakistani banks are required to keep a minimum of 5 percent of their cash reserves with the central bank over the weekend.

In case of a tight market, banks can borrow through the central bank's three-day repo facility at a discount rate of 9.0 percent.

Dealers said no major cash inflows were expected this week so the market was likely to remain illiquid, with rates firm.

In the currency market, the rupee eased to 60.19/21 to the dollar, compared with 60.16/18 on Wednesday.

Dealers said the rupee could fall further in coming days as import payments were expected to rise towards the end of the fiscal year on June 30.

The rupee hit a 19-month low last month but has since recovered on improved dollar supplies.

Thursday Previous Interbank market 60.19/21 60.16/18 Open market 60.50/55 60.50/55 REUTERS VJ PM1720