SBP raises nearly Rs385b at PIB auction

Exceeds target of Rs350b; gold rises to Rs280,800/tola while rupee drops 5 paisa against dollar

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KARACHI:

The State Bank of Pakistan (SBP) successfully raised Rs384.7 billion through the latest Pakistan Investment Bonds (PIBs) auction on January 15, 2025, exceeding its target of Rs350 billion. The auction drew strong interest, with total bids amounting to Rs1,568 billion, reflecting robust investor demand.

Cut-off yields across various tenors declined by 19 to 56 basis points (bps), with new rates ranging between 11.90% and 12.80%, indicating as overall downward trend in borrowing costs. The yields for 2-year, 3-year, and 5-year PIBs fell significantly, while the 10-year yield remained stable compared to the previous auction on December 18, 2024. This decline in yields indicates improved borrowing conditions and increased investor confidence in Pakistan's debt market. The SBP's ability to surpass the auction target highlights the strong appetite for government securities in the current macroeconomic environment.

Gold prices in Pakistan surged on Wednesday, in line with international trends. Domestic gold prices rose by Rs2,900 per tola, reaching Rs280,800. Similarly, the price of 10-gram gold increased by Rs2,487 to Rs240,741, according to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA). On Tuesday, the price of gold per tola had dropped by Rs1,400, closing at Rs277,900.

In global markets, gold prices also climbed, with the international rate rising by $29 to $2,690 per ounce. Adnan Agar, Director at Interactive Commodities, attributed the surge to favourable US Consumer Price Index (CPI) data, which has strengthened gold's upward momentum.

US consumer prices increased slightly more than expected in December amid higher costs for energy goods, pointing to still elevated inflation that aligns with the Federal Reserve's projections for fewer interest rate cuts this year.

US consumer prices rose 0.4% in December, following a 0.3% increase in November, as reported by the Labour Department on Wednesday. Over the past 12 months, the CPI advanced 2.9%, up from 2.7% in November. Progress toward bringing inflation back to the US central bank's 2% target stalled in the second half of last year.

A resilient economy, the potential imposition of broad tariffs on imported goods, and the prospect of mass deportations of undocumented immigrants—factors considered inflationary—have led the US central bank to forecast a more limited path for rate cuts this year.

Gold reached an intraday high of $2,693 and a low of $2,669, with current prices hovering near $2,687. Agar predicted further gains, potentially capping near $2,700 to $2,720 unless new developments emerge.

Meanwhile, the Pakistani rupee depreciated slightly against the US dollar, dropping 5 paisa to close at 278.77 in the inter-bank market. On Tuesday, the rupee had closed at 278.72, as reported by the SBP.

Globally, the US dollar index eased 0.2% as traders awaited a key US inflation report, enhancing gold's appeal. Benchmark 10-year US Treasury yields also slipped, further supporting bullion prices.