Pakistan’s money market remained under pressure as KIBOR continued to rise and now is much higher than the State Bank of Pakistan’s (SBP) policy rate of 11.5 percent
Borrowing now is more expensive due to volatile liquidity conditions, inflation, and the expectation that the regulator will continue to keep the benchmark rate higher for a longer period of time.
Despite this, people with fixed-deposit accounts will likely start seeing higher returns on their deposits.
As of May 20, all metrics from 1-Week to 6-month and including the 1-Year KIBOR tenors now remain between 11.84 percent to as high as 12.79 percent. These rates are higher than last month’s policy revision of 11.5 percent.
The trend indicates that local financial markets are pricing credit higher than the central bank’s current policy stance, increasing borrowing costs for businesses, including exporters and the industrial sector.
In the latest Treasury Bill auction, total participation reached Rs. 1,733 billion, while the government raised Rs. 688 billion against a target of Rs. 450 billion and maturities of Rs. 479 billion.
Despite strong demand, yields increased by 9-86 basis points.
The rise in both KIBOR and T-bill yields signals liquidity constraints in the banking system. As long as the current financing environment persists, investors will also continue demanding higher returns.
People depending on fixed income may start receiving higher yields in line with rising market rates in the coming weeks.
They played bad with figures and now its economy responding back with higher inflation.
But mind it, govt will fight at length to secure banks.
It should be . We are tired of debt to deduct tax obligation
Please sahiwal Pakistan
150000