Policy rate may rise as T-Bill yields increase sharply State Bank of Pakistan

Policy rate may rise as T-Bill yields increase sharply

KARACHI: The cut-off yield of treasury bills (T-Bills) increased sharply in an auction held on Wednesday indicating an expected rise in policy rate in upcoming monetary policy announcement scheduled for April 19, 2022.

“In today’s [April 06, 2022] treasury bills auction, cut-off yields increased by 60 – 80 basis points,” according to analysts at Topline Securities.

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The government raised Rs645 billion through auction of treasury bills against the target of Rs600 billion and maturity of Rs674 billion, according to results announced by the State Bank of Pakistan (SBP).

The key policy rate has been kept unchanged at 9.75 per cent in the last Monetary Policy Statement (MPS) on March 08, 2022. However, the cut-off yields of government securities have shown much higher rate against the policy rate.

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The cut-off yields of 3-, 6- and 12-month papers increased by 80 basis points, 75 basis points and 60 basis points, respectively. The yields in three-month treasury bill increased to 12.80 per cent from 11.9999 per cent. Similarly, yields in six-month and 12-month papers have increased to 13.25 per cent from 12.50 per cent and 13.2999 per cent from 12.70 per cent, respectively.

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The latest auction of treasury bills witnessed aggressive participation from the banks. The SBP received bids worth Rs911 billion against the target of Rs600 billion.

However, the central bank accepted bids worth Rs645 billion at maturity of Rs674 billion.

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