SBP sells Rs187bln through MTBs

KARACHI: The State Bank of Pakistan (SBP) on Wednesday sold Rs187.90 billion worth of treasury bills at an auction, higher than the target of Rs150 billion set by the Finance Ministry for borrowing from banks.
The SBP sold Rs67.821 billion worth of six-month government papers at 6.9513 percent, same as the previous rate. It sold Rs50.836 billion of three-month paper at 6.9308 percent, unchanged from the last auction.
The central bank also sold Rs69.247 billion of one-year treasury bills at flattish rate of 6.9710 percent.
Cut-off yields on market treasury bills remained flat, but analysts believe the latest lower-than-expected consumer price index inflation numbers has provided the central bank enough space to further cut the interest rates in its upcoming monetary policy review meeting scheduled to be held later this month.
However, a bearish outlook on commodity prices, recent increase in gas tariff by an average 38 percent and the pressure on the rupee may restrain the decision makers to do so.
The upcoming T-bills auction to be held on September 16 will give a proper idea about the potential the SBP’s stance on the monetary policy.
Analysts foresee the CPI inflation to be at six percent during the current fiscal year.
CPI inflation for August 2015 clocked in at 1.7 percent against 1.8 percent in July this year.
The SBP kept the policy rate unchanged at 6.5 percent in the monetary policy announcement on July 25.
The government is still the major borrower from the banks. According to the latest auction calendar release by the SBP, the government plans to raise a total of Rs1.50 trillion through the sale of T-bills and Pakistan Investment Bonds during September to November period.