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OMO results: SBP injects Rs1.77tr for 7 and 63 days

December 17, 2021 (MLN): The State Bank of Pakistan (SBP) conducted two Open Market Operations (OMO) today, in which it injected Rs1.085 trillion and Rs689.35 billion into the market for 7 days and 63 days at 9.82% and 9.90%, respectively.

According to Senior Economist, Ali Khizar, the Governor SBP, Dr. Reza Baqir clearly indicated a pause in January’22 while SBP issued OMO injection for 63 days and 7 days. Both moves will reduce banks’ repricing risk for two months.

“It makes sense to invest more in 3M T-Bills. The auction is on the 30th December 2021. Banks will get cover 49 days of repricing risk. For 3M paper, their risk exposure is 33 days. There is no change in January MPS and the next policy is on 8th March. For 12 days exposure is covered. Naked exposure is 13 days,” he said.

Hence, banks should bid low. Historically, 50 bps spread is good for 7 days OMOs to roll for 3M papers where maximum naked exposure is 77 days. Here, it is 13 days, he added.

Meanwhile, Shahid Habib, CEO at Arif Habib Limited termed this a positive step by SBP.

To recall, SBP in its recent Monetary Policy Statement (MPS) said that across all tenors, secondary market yields, benchmark rates and cut-off rates in the government’s auctions have risen significantly. The MPC noted that this increase appeared unwarranted. In spite of that, yields in the last T-Bill auction remained the same while in secondary markets it went up by 20-30bps after the auction.

After this recent move by SBP, yields in money markets came down by 34-40bps to 10.27% and 11.07%, for 3M and 6M papers, respectively. PIBs also have rallied with the yield falling by 10-13bps on 3- and 5-year bonds, to 11.53% and 11.58%, respectively, a report by Topline Securities said.

Summary of OMO Result

 

 

Amount (Rs in millions)

Rate (%)

Quotes

Tenor

Type

Offered

Accepted

High – Low

Accepted

Offered

Accepted

7-Days

Reverse Repo (Injection)

1,085,500.00

1,085,500.00

10.25 – 9.82

9.82

29

29

63 Days

Reverse Repo (Injection)

752,650.00

689,350.00

10.36-9.50

9.90

28

25

Total

1,838,150.00

1,774,850.00

 

Copyright Mettis Link News

 

 

Posted on: 2021-12-17T16:21:36+05:00

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