Money Market, Forex and General News 22-07-09
Thursday, July 23, 2009
MONEY MARKET
Money market opened at 13.25 percent and topped at 13.75 percent. Due to liquidity crunch, Central Bank conducted Open Market operations (Rev-Repo) for three days. The amount accepted was PkR. 18.4 billion at 12.61 percent. As a result of that market went down and closed at 11.25 percent.
FOREX
Inter-bank opened at 82.05 & 82.10.Market remained calm and no drastic movement was seen either way. Rupee gained just two basis points at bid and offer to close at 82.03 & 82.08.
GENERAL NEWS
Since the last policy statement released on April 20th, market has priced another steep cut in policy rates in the debt market. This is reflected from the bullish bond, T-bill and KIBOR trends. All adjusted in the range of 100-150bps.
Fundamentally speaking macro imbalances are in corrective phase through inflation and twin deficit improving, whilst, economic growth has emerged as a prime victim
of the stabilization program.This can be reflected from contraction in LSM (14%) during April and flat private credit off take trend in the past twelve months.
On the basis of these, the balance of risk is clearly highlighting a steep cut in policy rate. However, other side of the coin is disturbing and questioning the steep cut. To be clear, government has planned ambitious development target on the basis of exaggerated tax and external financing mode.
Any slippage would definitely warrant a shift in monetary and fiscal transmission from neutral to aggressive. Hence, the key from here is the flow of external financing.
Money market opened at 13.25 percent and topped at 13.75 percent. Due to liquidity crunch, Central Bank conducted Open Market operations (Rev-Repo) for three days. The amount accepted was PkR. 18.4 billion at 12.61 percent. As a result of that market went down and closed at 11.25 percent.
FOREX
Inter-bank opened at 82.05 & 82.10.Market remained calm and no drastic movement was seen either way. Rupee gained just two basis points at bid and offer to close at 82.03 & 82.08.
GENERAL NEWS
Since the last policy statement released on April 20th, market has priced another steep cut in policy rates in the debt market. This is reflected from the bullish bond, T-bill and KIBOR trends. All adjusted in the range of 100-150bps.
Fundamentally speaking macro imbalances are in corrective phase through inflation and twin deficit improving, whilst, economic growth has emerged as a prime victim
of the stabilization program.This can be reflected from contraction in LSM (14%) during April and flat private credit off take trend in the past twelve months.
On the basis of these, the balance of risk is clearly highlighting a steep cut in policy rate. However, other side of the coin is disturbing and questioning the steep cut. To be clear, government has planned ambitious development target on the basis of exaggerated tax and external financing mode.
Any slippage would definitely warrant a shift in monetary and fiscal transmission from neutral to aggressive. Hence, the key from here is the flow of external financing.
Labels: Economy and Business, Pakistan Economy
posted @ 10:51 AM,
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