Govt raises Rs616bn

KARACHI: The government managed to raise Rs616 billion through the auction of the Market Treasury bills on Wednesday, falling short of the Rs800 billion target. The yields on the notes dropped to their lowest levels since March 2022.

The yield on a three-month T-bill fell by 70 basis points (bps) to 12.99 per cent. The yield on a six-month paper dropped by 61bps to 12.89 per cent and that on a 12-month note decreased by 85bps to 12.35 per cent.

The three-month yield has reached its lowest level since April 2022, while the six- and 12-month yields have dropped to levels last seen in March 2022, said Arif Habib Limited in a note.“The auction witnessed robust participation, with bids amounting to Rs2,494 billion against a target of Rs800 billion, resulting in a bid-to-cover ratio of 3.1x. The SBP accepted Rs616 billion, falling short of the target,” it said.

The State Bank of Pakistan (SBP) on Tuesday exempted certain deposits from minimum profit rate requirements.The government, in a monthly economic update and outlook, expects inflation to remain within the range of 5.8-6.8 per cent in November, further receding to 5.6-6.5 per cent by December.

According to the Topline Securities report, the Consumer Price Index (CPI) for November is expected to clock in at 4.5-5 per cent, year-on-year taking a five-month FY25 average to 7.91 per cent, compared with 28.62 per cent in the same period last year.

Headline inflation stood at 7.2 in October, compared with 6.9 per cent in the previous month.“With inflation expectations of 4.5-5 per cent for November, real rates will surge to 1000-1050bps, significantly higher than Pakistan’s historic average of 200-300bps,” the report said.

“We expect the interest rate to clock in at 11-12 per cent by December 2025, suggesting positive real rates of 200-300bps based on FY26 inflation average of 8.8 per cent. For FY25, we expect inflation to clock in at 7-8 per cent,” it said.This month, the SBP lowered its key interest rate by 250 basis points to 15 per cent, marking the fourth straight cut.