Govt raises Rs680b via T-bills

Bids hit Rs2.77tr with mixed yields; gold plunges Rs11,300/tola

KARACHI:

The government raised Rs680 billion through the auction of Market Treasury Bills on Wednesday, falling short of the Rs800 billion target even as banks and investors submitted bids worth Rs2.77 trillion.

The State Bank of Pakistan (SBP) accepted papers across four tenors at a weighted average yield of 11.60%. Demand was heavily skewed towards shorter maturities, while longer-term papers saw limited uptake.

Cut-off yields moved in mixed directions. The one-month T-bill was accepted at 11.39%, down eight basis points from the previous auction. The three-month paper settled at 11.60%, five basis points lower. The six-month yield rose 10 basis points to 11.90%, while the 12-month cut-off yield held unchanged at 11.99%.

Accepted amounts told a clear story of tenor preference. Against a Rs100 billion target for one-month bills, the SBP took Rs124 billion after receiving bids of Rs1.17 trillion. Three-month papers drew Rs459 billion in bids against the target of Rs200 billion, where Rs388 billion was accepted.

Six-month and 12-month papers stood below targets. The SBP accepted only Rs121 billion of the Rs200 billion six-month target and just Rs48 billion of the Rs300 billion 12-month target, despite bids of Rs432 billion and Rs711 billion, respectively.

Compared with secondary-market yields on the auction day, the one-month cut-off came in seven basis points' cheaper. The three-, six- and 12-month papers were priced slightly above secondary-market levels.

Furthermore, the Pakistani rupee closed at 277.45 against the US dollar on Wednesday, up Rs0.01 from Tuesday's settlement at 277.46.

Gold prices in Pakistan fell sharply even as international bullion recovered from a near one-month low. In the local market, the 24-karat gold closed at Rs454,036 per tola after losing Rs11,300 during the day, according to rates issued by the All-Pakistan Gems and Jewellers Sarafa Association. Ten-gram gold was quoted at Rs389,262, down Rs9,688.

The domestic decline stood in contrast to the overseas session. Spot gold rose about 1% to $4,373 per ounce by early afternoon in New York, bouncing from its lowest level since August 7, as per Reuters. Interactive Commodities Director Adnan Agar said gold hit a session low of $4,282 before recovering towards $4,400 and last stood near $4,366.

Friday's US non-farm payrolls report is the next key test. Weaker job creation will reduce the odds of a Federal Reserve rate hike and support gold. Stronger payrolls will raise the chance of a tighter policy and weigh on bullion prices. A neutral outcome will also favour the metal.

The US CPI follows next week, with the Fed's policy meeting the week after. Rising inflation will revive rate hike expectations; cooler readings will ease the pressure.