The State Bank of Pakistan (SBP) released the Karachi Interbank Offered Rates (KIBOR) for various tenors on Monday, August 2, 2021, providing updated benchmarks for interbank lending and borrowing activities in the financial sector.
According to the SBP, the KIBOR rates for the 1-week tenor was recorded at 6.91 percent on the bid side and 7.41 percent on the offer side. For the 2-week period, the rates slightly increased, with a bid rate of 6.95 percent and an offer rate of 7.45 percent. These short-term KIBOR rates reflect modest upward movement in interbank liquidity costs and offer a glimpse into the prevailing monetary environment of that time.
Moving to longer tenors, the 1-month KIBOR rates stood at 7.01 percent (bid) and 7.51 percent (offer), while the 3-month tenor was listed at 7.14 percent on the bid side and 7.39 percent on the offer side. The gradual rise in KIBOR along the term structure suggests growing expectations of inflationary pressure and a more cautious lending approach among financial institutions.
The mid- to long-term KIBOR rates demonstrated a consistent upward trend. For the 6-month period, SBP reported a KIBOR of 7.35 percent bid and 7.60 percent offer. Similarly, the 9-month KIBOR reached 7.46 percent (bid) and 7.96 percent (offer). The 1-year KIBOR closed at 7.54 percent on the bid and 8.04 percent on the offer side, signaling rising cost of capital for longer-term borrowing.
KIBOR is a vital benchmark in Pakistan’s financial markets, used by banks and financial institutions to price loans and manage interest rate risk. The SBP plays a key role in publishing KIBOR rates, which reflect market sentiments, liquidity conditions, and the overall monetary policy stance.
As an indicator of interbank credit conditions, KIBOR helps businesses and investors assess borrowing costs and financial outlook. The SBP’s continued publication of KIBOR ensures transparency and standardization in the financial system, helping foster confidence and predictability in monetary operations.