Govt raises Rs664bn through T-bills’ auction; yields move down

KARACHI: The government raised Rs664.2 billion from the auction of Market Treasury bills (T-bills) on Wednesday, above the Rs550 billion target.

According to the auction results released by the State Bank of Pakistan (SBP), the cut-off yield fell across all tenors, ranging from 66 to 90 basis points (bps). The one-month T-bill decreased by 90bps to 11.25 per cent. The three-month paper yield also declined by 77bps to 11.24 per cent. The yield on the six-month T-bill was down 72bps at 11.28 per cent. The yield on the 12-month paper fell by 66bps to 11.35 per cent.

In the floating-rate Pakistan Investment Bonds’ auction, the government raised Rs113 billion (competitive and non-competitive) against the participation of Rs1,731 billion and a target of Rs200 billion.

This month, the SBP lowered its benchmark interest rate by 100bps to 11 per cent, marking the continuation of a series of rate cuts that reduced the rate from a record high of 22 per cent after a brief hold in March. With the current reduction, the policy rate has fallen to its lowest level in three years, resulting in a cumulative cut of 11 percentage points since June 2024.

The SBP, in its monetary policy statement, noted a significant drop in inflation between March and April, mostly attributed to a fall in energy and food prices. Headline inflation eased to 0.3 per cent in April, down from 0.7 per cent in the previous month. Core inflation, which had remained around 9.0 percent for several months, slowed to 8.0 per cent in April. This decline is largely due to a favourable base effect in the context of moderate demand conditions.