SBP sells treasury bills worth Rs 1.153 trillion
The central bank held treasury bills auction on Wednesday.
KARACHI (Dunya News) - State Bank of Pakistan sold treasury bills worth Rs 1.153 trillion in first auction after the announcement of the monetary policy last week.
The State Bank of Pakistan last week announced monetary policy for two months raising the interest rate by 25 basis point to 6 percent, surprising all the economists and observers of the financial markets.
The central bank held treasury bills auction on Wednesday collecting bids worth Rs 1.863 trillion of this bids worth Rs 1.153 trillion were accepted at the rate of 6.21 percent against last auction of 5.99 percent, raising the short term paper rate by 22 basis points.
“Still no participation witnessed in six months and one year paper as the recent monetary policy announcement hints more increase in benchmark interest rate which raised last week after almost 20 months”, an analyst said.
Four key factors of Pakistan’s economy have witnessed important changes since November 2017 impinging upon the policy rate decision. Firstly, PKR has depreciated by around 5 percent. Secondly, oil prices are hovering near USD 70 per barrel.
Thirdly, a number of central banks have started to adjust their policy rates upwards adversely affecting PKR interest-rate differentials.
Fourthly, multiple indicators show that the output gap has significantly narrowed indicating a buildup of demand pressures.
Based on these developments, MPC is of the view that in order to preempt overheating of the economy and inflation breaching its target rate, this is the right time to make a policy decision that would balance growth and stability in the medium to long term.
