The State Bank of Pakistan (SBP) raised Rs. 1.26 trillion against a target of Rs. 1.2 trillion in the most recent treasury bill auction on Wednesday.
Despite the big money raise, cut-off yields in the auction had a slight dip in three-month and six-month papers as opposed to expert estimates.
The three-month paper’s cut-off yield fell by 19 basis points to 10.59 percent while the six-month paper’s yield fell five basis points to 11.45 percent. The yield on the 12-month paper remained at 11.51 percent, unchanged from the auction on 15 December.
Despite the considerable liquidity pushed into the money market by the central bank through open market operations (OMOs) of exceptionally long tenures in the last two weeks, rates have fallen marginally as opposed to the numbers observed during the 15 December auction.
The SBP had staged two 63-day OMOs in the recent two weeks to lend banks a total of Rs. 1.07 trillion in cash. As banks had adequate capital to bid for treasury bills, experts forecast that the auction on 29 December will be held at lower rates than before.
Overall, the cut-off yields on all the government bonds increased significantly in the last 18 months, and the yield on the three-month paper is holding around 10.25 percent in the secondary market.
According to experts, secondary market yields will soar as soon as the Pakistan Bureau of Statistics issues November’s inflation data, which is expected to be between 12-12.5 percent.