KARACHI, May 23, 2023 — The State Bank of Pakistan (SBP) has officially released the updated Karachi Interbank Offered Rates (KIBOR) for May 23, 2023, providing critical benchmarks for financial institutions and businesses operating in the country.
KIBOR serves as a reference rate at which banks lend to one another in the local interbank market and is crucial for setting lending rates across a wide range of corporate and consumer loans.
According to the SBP, the short-term KIBOR rates for the one-week and two-week tenors were recorded with bid rates around 20.89% and 20.94%, respectively, while offer rates stood slightly higher at 21.39% and 21.44%. For the one-month tenor, the bid rate was reported at 21.04% and the offer rate at 21.54%.
Longer-term KIBOR rates showed a similar upward trend. The three-month KIBOR was quoted with a bid of 21.81% and an offer of 22.06%, reflecting tight liquidity conditions and market expectations of sustained high-interest rates. The six-month and nine-month KIBOR rates followed closely, with bid rates at 21.83% and 21.85%, and offer rates at 22.08% and 22.35%, respectively. For the one-year tenor, the bid and offer rates stood at 21.86% and 22.36%.
Financial analysts note that the persistence of elevated KIBOR rates reflects underlying inflationary pressures and the monetary policy stance maintained by the SBP to curb inflation and stabilize the exchange rate. KIBOR remains a vital indicator for corporate borrowers, particularly in sectors like manufacturing, real estate, and energy, where project financing heavily depends on borrowing costs.
The current high KIBOR levels are seen as a continuation of the SBP’s tight monetary policy, intended to manage demand-side pressures in the economy. Businesses and consumers alike are feeling the impact, with borrowing becoming increasingly expensive, thereby affecting investment decisions and expansion plans.
In Pakistan’s banking system, KIBOR serves not just as a daily financial benchmark but also as a key signal of broader economic trends. Market participants closely monitor movements in KIBOR to adjust their pricing strategies, manage liquidity, and anticipate shifts in monetary policy.
As the economic environment continues to evolve, future adjustments in KIBOR will likely depend on inflation trajectories, foreign exchange dynamics, and the SBP’s policy decisions.