Pakistani c bank mops up funds but o/n rates ease

KARACHI, June 23 (Reuters) Pakistan's central bank mopped up 14 billion rupees from the money market through an open market operation on Friday but money rates stayed low because the volume of outflows fell short of expectation, dealers said.

The State Bank of Pakistan said it had received 21.20 billion rupees worth of bids from banks for its six-day repo sales.

But it accepted only 14 billion rupees in bids at an interest rate of 7.9 percent, leaving the market liquid and disappointing market players, who were hoping for a slight increase in rates.

''We were expecting rates to rise but they slipped even lower,'' said a dealer at a local brokerage.

''The liquidity conditions haven't changed at all and the market is still long by 10 billion rupees.'' Dealers the central bank has made the going tough, as overnight call rates closed at 2.5 percent compared with 6.0 percent a day earlier.

They said there were not many long-term deals taking place and most banks were only covering their daily cash positions ahead of the end of the fiscal year on June 30.

In the currency market, the rupee closed flat at 60.25/27 to the dollar. Dealers said strong dollar inflows had offset the impact of some scattered payments.

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

Friday Previous Interbank market 60.25/27 60.25/27 Open market 60.63/68 60.62/67 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 REUTERS PV HS1555