KARACHI: The government rejected all the bids for the auction of treasury bills on Wednesday ending speculations about increasing yields on the papers in the secondary market.

It received Rs326 billion bids for three-, six- and 12-months papers but all of them were rejected as the bidders were expecting higher yields. The government had set a target of Rs300bn while maturities for this week were of Rs340bn.

The secondary market witnessed continued increase in the yields particularly the long-term bonds in anticipation that inflation may start rising and the interest rate see a hike.

“The rejection of all bids could be a strong signal to the secondary market that the rising yields trend would not affect the government’s determination,” said a money market dealer.

However, the bonds dealers said any increase in inflation will only strengthen the secondary market’s speculative movement for the long-term bonds.

“If the main inflation [measured through the CPI] comes down for April, the speculation will die on its own,” said the dealer.


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