6-Month KIBOR Surges to All-Time High

The 6-Month Karachi Inter-Bank Offered Rate (KIBOR), a benchmark for lending to consumers and businesses, increased by 25 basis points (bps) on a day-on-day (DoD) basis to touch an all-time high amid rising borrowing costs.

According to the State Bank of Pakistan (SBP) data, the KIBOR clocked in at 19.96 percent after last week’s secondary market theatrics which saw treasury bills sold at exorbitant rates.

The other widely used 3-Month KIBOR was up 25 bps and was recorded at 19.81 percent. The 1-year KIBOR rose by 50 bps to 20.32 percent.

The SBP’s Monetary Policy Committee (MPC) is expected to raise interest rates by at least 200 basis points in an emergency market review as the government seeks a ~$1.1 billion bailout from the International Monetary Fund (IMF) to save the economy.

While the next MPC is scheduled for March 16th, 2023, the central bank may be forced to call an urgent revision before the next secondary market auction on 8 March for raising Rs. 1.8 trillion.

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