SBP sells Rs83b treasury bills
SBP accepted bids worth Rs83.02 billion in its auction of market treasury bills.
KARACHI:
The State Bank on Wednesday accepted bids worth Rs83.02 billion in its auction of market treasury bills compared to a target of Rs75 billion. The auction exceeded its target by 10.66 per cent.
Banks and other financial institutions made offers of Rs141.97 billion for three, six and 12-month bills, but the central bank accepted bids worth Rs83.02 billion.
Cut-off yield for six-month treasury bills slightly fell to 12.66 per cent compared to 12.68 per cent in the last auction held on August 11.
“Had the yield been maintained at the previous level, the central bank would have accepted more bids. And there was no need to absorb more offers when the Rs75 billion target had already been crossed,” a money market expert said.
Yields for the three and 12-month papers were kept unchanged at 12.51 per cent and 12.78 per cent respectively. “This indicates that the interest rate will remain unchanged in the near future,” the expert said.
The State Bank enhanced its policy rate, a benchmark for banks in setting interest rates, by 50 basis points to 13 per cent in its bi-monthly monetary policy review on July 30. The next review is due at the end of September.
The State Bank increased the discount rate despite widespread calls from the trade and industry to reduce the interest rate in order to give an impetus to the manufacturing sector. The industry had been demanding a cut in the cost of borrowing for a long time, which would help them strengthen their competitiveness in the international market.
However, the State Bank said the country faces challenges of high inflation and fiscal imbalances, which have prompted the increase in the interest rate.
Inflation in July stood at 12.34 per cent and it is feared to surge above 20 per cent in the current financial year because of the massive devastation caused by floods to crops, infrastructure and people’s livelihood.
In the last fiscal ended June 30, fiscal deficit crossed the target of 5.1 per cent by a wide margin and stood at 6.1 per cent. According to the Federal Minister for Food and Agriculture Nazar Mohammad Gondal, floods have damaged crops on 4.25 million acres, indicating this may lead to some shortage of commodities. As a result, the country will have to import commodities like cotton and sugar and cope with high prices in the domestic market.
Published in The Express Tribune, August 26th, 2010.
The State Bank on Wednesday accepted bids worth Rs83.02 billion in its auction of market treasury bills compared to a target of Rs75 billion. The auction exceeded its target by 10.66 per cent.
Banks and other financial institutions made offers of Rs141.97 billion for three, six and 12-month bills, but the central bank accepted bids worth Rs83.02 billion.
Cut-off yield for six-month treasury bills slightly fell to 12.66 per cent compared to 12.68 per cent in the last auction held on August 11.
“Had the yield been maintained at the previous level, the central bank would have accepted more bids. And there was no need to absorb more offers when the Rs75 billion target had already been crossed,” a money market expert said.
Yields for the three and 12-month papers were kept unchanged at 12.51 per cent and 12.78 per cent respectively. “This indicates that the interest rate will remain unchanged in the near future,” the expert said.
The State Bank enhanced its policy rate, a benchmark for banks in setting interest rates, by 50 basis points to 13 per cent in its bi-monthly monetary policy review on July 30. The next review is due at the end of September.
The State Bank increased the discount rate despite widespread calls from the trade and industry to reduce the interest rate in order to give an impetus to the manufacturing sector. The industry had been demanding a cut in the cost of borrowing for a long time, which would help them strengthen their competitiveness in the international market.
However, the State Bank said the country faces challenges of high inflation and fiscal imbalances, which have prompted the increase in the interest rate.
Inflation in July stood at 12.34 per cent and it is feared to surge above 20 per cent in the current financial year because of the massive devastation caused by floods to crops, infrastructure and people’s livelihood.
In the last fiscal ended June 30, fiscal deficit crossed the target of 5.1 per cent by a wide margin and stood at 6.1 per cent. According to the Federal Minister for Food and Agriculture Nazar Mohammad Gondal, floods have damaged crops on 4.25 million acres, indicating this may lead to some shortage of commodities. As a result, the country will have to import commodities like cotton and sugar and cope with high prices in the domestic market.
Published in The Express Tribune, August 26th, 2010.