KARACHI: The State Bank of Pakistan sold Rs3.763 billion worth of short-term government papers at an auction on Wednesday, with the yields remained unchanged.
The raised amount was lower than the pre-auction target of Rs500 billion. The interest was entirely skewed towards the shortest tenure (three-month market treasury bills). The bids for the six and 12-month papers were rejected.
The cut-off yield on three-month market treasury bills stood at 12.7493, unchanged from the previous auction held on June 3. Analysts said the rejection in six and 12 months MTBs was due to higher rates offered by commercial banks.
The banks opted to tilt their portfolio towards short term market treasury bills as expectation of a further rise in policy rate discouraged them to invest in long-term debt instruments, largely to manage market risk.
Government’s inflation estimate of 11-13 percent for the next fiscal year implies that there is room for further monetary tightening. The central bank would sale Rs6.40 trillion of three-, six and 12 months debts through treasury bills in June to August 2019.