The government raises Rs509 billion through the auction of MTBs.

KARACHI: Government on Wednesday raised Rs509 billion through the auction of Market Treasury Bill (MTB), which was slightly higher against the target of Rs500 billion, data showed.

The cut-off yield on three-month T-bills remained unchanged at 10.30 percent. The State Bank of Pakistan (SBP) sold Rs255 billion of three-month paper, the central bank’s auction result revealed.

The yields on six-month paper marginally fell three basis points to 10.66 percent. The SBP sold Rs173 billion of six-month T-bill. The 12-month yield also dropped five bps to 10.88 percent. The SBP sold Rs81 billion worth of 12-month paper.

Analysts said the yields continued to decline as investors expect the interest rates to stay steady in the near term. The SBP kept the policy rate unchanged at 9.75 percent last month. It said the current monetary policy along with the fiscal (recent finance bill enactment) settings and current real interest rates on a forward looking basis were appropriate to achieve medium term inflation target of 5-7 percent, and would also keep ongoing economic recovery sustainable.

The consumer price index (CPI) inflation reached a two-year high 0f 13 percent in January. The rise in inflation is attributed to low base effect, and higher food inflation.

“With rising oil prices and expected increase in power tariffs, we anticipate monthly CPI inflation to remain in the range of 11-13 percent during the remainder of FY2022,” said analyst at Topline Securities “We also expect inflation to average 11 percent in FY2022 as compared to 8.9 percent in FY2021.” He was of the view that it would be at the higher end of the inflation range the SBP had forecasted for FY2022 of 9-11 percent for FY2022.