KARACHI: The central bank sold Rs292 billion worth of short-term debt securities at an auction on Wednesday, with yields rising on shorter tenors.

The raised amount was higher than the auction target of Rs250 billion. The cut-off yield on Pakistan’s six-month benchmark treasury was at 5.9471 percent, up 425 basis points from the previous auction’s 5.9046 percent.

The State Bank of Pakistan (SBP) sold Rs25 billion short-term paper. The cut-off yield for a three-month market treasury bill increased 446 basis points to 5.9463 percent against 5.9017 percent in the last auction; while the State Bank of Pakistan sold Rs267 billion worth of
shortest tenor government paper. The government rejected bids of a 12-month treasury bill.

Analysts said the yields on T-bills edged up in line with a shift in the government’s strategy to borrow money from the commercial banks through short-term papers.  Similarly, banks also took their direction from the government’s changing debt policy, and were parking their bulk of cash into shorter-dated securities.

Many traders still don’t see any change in the monetary policy stance of the central bank at its upcoming meeting to be held later this month.

“Traders are still struggling to gauge the next stance of the State Bank about the policy rate on rise in inflation expectations in months to come,” said an analyst. Some analysts expect higher shorter-dated yields on assumptions that the central bank would raise interest rates in its January meeting.

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