SBP rejects all PIB bids despite strong demand

Gold loses Rs8,900 per tola amid global sell-off

KARACHI:

The State Bank of Pakistan (SBP) rejected all bids in the latest auction of Pakistan Investment Bonds (PIBs), despite strong participation from banks amid increased interest rates.

According to the auction result released on Tuesday, the central bank received total bids worth Rs906.4 billion across multiple tenors and did not accept any of them.
The auction featured a mix of short-, medium-, and long-term instruments, including 2-year zero-coupon, 3-year, 5-year, 10-year, and 15-year zero-coupon PIBs.

The bulk of participation was concentrated in the 5-year and 10-year tenors, highlighting investor preference for medium- to long-duration instruments amid uncertainty over the monetary policy trajectory.

The 5-year PIB attracted the highest participation, with bids exceeding Rs425 billion. Similarly, strong interest was observed in the 10-year tenor, where bids crossed Rs162 billion, indicating continued appetite for locking in yields over a longer horizon.

In contrast, relatively lower participation was seen in the shorter 2-year and 3-year papers, suggesting that market participants are positioning for potential shifts in the interest rate cycle rather than focusing on near-term maturities.

The auction comes a day after the SBP raised the policy rate by 100 basis points to 11.5%, citing inflationary risks stemming from global commodity volatility and geopolitical tensions. The PIB auction results suggest that market participants are recalibrating expectations in light of the tightening stance, with demand tilting toward longer tenors to secure attractive yields.

Furthermore, the Pakistani rupee posted a marginal gain against the US dollar in the inter-bank market on Tuesday, closing at 278.81, up Rs0.01 from Monday’s 278.82.

Meanwhile, gold prices in Pakistan fell sharply on Tuesday, mirroring losses in the international market where bullion dropped more than 2% to a near four-week low amid persistent inflation concerns and geopolitical uncertainty.

In the local market, the price of gold per tola declined by Rs8,900 to settle at Rs485,062. Similarly, 10-gram gold fell by Rs7,630 to Rs415,862, according to rates issued by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA). A day earlier, gold per tola had closed at Rs493,962 after gaining Rs800.
Silver prices also moved lower, shedding Rs238 to Rs7,811 per tola, although the level remains historically elevated.

In the international market, spot gold dropped 2.4% to $4,570.34 per ounce by midday trading, marking its lowest level since early April. US gold futures for June delivery also declined 2.3% to $4,584.70, reflecting cautious investor sentiment ahead of the US Federal Reserve’s monetary policy announcement.

Analysts attributed the decline to a stronger dollar and rising inflation concerns, compounded by geopolitical tensions. US President Donald Trump’s dissatisfaction with Iran’s latest proposal to end hostilities has dampened hopes for a near-term ceasefire, adding to market volatility.