SBP raises Rs 16b in just two days

Staff Report

KARACHI: The State Bank of Pakistan (SBP) on Thursday sold treasury bills worth Rs 9.93 billion through one-week repurchase agreements in an effort to mop up excess market funds from the money market.

The SBP said it sold the bills at 7.90 percent. Banks offered Rs 10.6 billion for this OMO.

“Market is not liquid and the primary dealers are offering amount from their reserves,” said Naeemul Hassan, money market head at Invest Capital and Securities. Dealers said the overnight rate was trading between 7.25 and 7.75 percent before this open-market operation. The rate closed at 6 percent.

“The primary dealers offered this amount from their reserves, as they have no excess liquidity,” said a banker. “This was led by the fact that the averaging factor has already been accounted for and the mopping of Rs 9.9 billion from the system did not help much,” the banker added. The SBP raised Rs 6 billion through OMO on last Wednesday.

In the last auction held on August 31, the central bank sold benchmark paper of Rs 4.372 billion at unchanged cut-off yield at 8.13 percent against an offer of Rs 15.441 billion. The SBP sold three-month paper worth Rs 94.388 billion at a cut-off yield at 8.10 percent higher from previous 7.91 percent. The central bank raised 19 basis points on the three-month paper.

The SPB kept the yield of one-year paper untouched. It sold papers worth Rs 7.125 billion at 8.79 percent against an offer of Rs 12.684 billion.

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