KARACHI (December 25 2003): The State Bank on Wednesday received poor response on the auction of treasury bills which compelled the Bank to stick to a meagre amount against the huge target.
The State Bank had set a target of Rs 15 billion for the auction of T-bills but it received bids only worth Rs 4.813 billion. Bids pattern showed that banks were willing to get higher cut-off yield as bids were put with an expected yield of even up to 4 percent.
However, the State Bank stuck to its policy of not allowing higher yield and raised only Rs 196.12 million out of Rs 15 billion target.
The SBP rejected all bids for three months T-bills and accepted only Rs 196.12 million for 12-month maturity with a cut-off rate of 1.9893 percent per annum.
The weighted average annual yield on 12-month Treasury bills rose to 1.9893 percent from 1.9848 percent at the last sale on November 25.
The cut-off yield for accepted bids on the 12-month T-bills was set at 1.9893 percent, against 1.9948 percent at the previous sale.
Market experts said that the Sate Bank did not lift even token amount at a higher cut-off yield, showing its determination to keep the interest rates at the prevailing levels.
However, banks have started showing their resistance against the record low interest rates which would hamper their income.
The market remained tight as the overnight rates reflected by touching 6 percent return. By the close of the day the overnight rates were at 4.5 percent.
Market experts said rates would ease next week as an inflow of Rs 22 billion is scheduled on the back of maturing government papers.