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Pakistan Currency can be seen in this undated image. — AFP/File
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KARACHI: Production related to Treasury Bills increased on Wednesday as traders faced doubts that the central bank could still have the capacity to reduce interest rates in its upcoming policy meetings despite high basic inflation and pressure from the ongoing external account.
According to the results of the auction released by the State Bank of Pakistan, production on one month’s T -bills increased by 34 twenty points (BPS) by 12.3898 percent.
Production on three months’ T -Bills increased from 19bps to 12.01 percent, six months’ T -Bills increased by 33bps to 11.99999 percent, and production on 12 months’ T -Bills also increased to 11bps to 12.01 percent.
In the latest T -Bill auction, the government raised a total of Rs 640 billion, which was slightly below the target of Rs 650 billion. The total bids received were Rs 1.085 trillion.
The auction results were announced after the International Monetary Fund (IMF) and the staff level agreement (SLA) between the International Monetary Fund (IMF) and Pakistan, for the first review of the 37 -month expansion fund facility, which could release a $ 1 billion train, and reaches $ 1.3 billion in 28 months.
The IMF has said that Pakistan will continue to implement the stance of data dependent on data and strict monetary policy to maintain inflation in a mid-term target of 5-7 %.
The March inflation, which will be released in early April, will draw attention to the SBP policy meeting on May 5, with finalizing the IMF review and improving the country’s economy. Observers will look for indications whether the central bank will continue its easier cycle or take a more cautious approach.
“The bid pattern shows that market participants are not optimistic about the reduction in rate,” said AKD Securities Limited Director Research Evice Ashraf.
Ashraf added, “With the release of the train from the IMF, the real interest rate and improvement in foreign arrival will create the capacity to fall into the single digits.”
According to the Ministry of Finance’s monthly economic approach, the country’s inflation is likely to remain stable in March, which is estimated at 1-1.5 %. However, inflation may increase slightly in April, which reaches 2-3 %.
Pakistan’s gross domestic products (GDP) increased by 1.73 % in the three months ended in December, compared to the same period last year. As shown by official data, growth was changed by 1.34 % in July -September.
Sana Taufiq, the head of the research at Karachi -based brokerage firm Arif Habib Limited, noted that the production of T -Bill has been increasing since the last financial policy meeting on March 10, when the SBP decided not to change its benchmark interest rate at 12 %, which is expected to reduce the market.
Tafi Qi said that although the March inflation forecast is expected to be less than 1.0 percent, it has become less relevant, though it is very low.
He said, “The basic inflation remains sticky, which is shaking between 8-9 percent, as the SBP has highlighted in its recent monetary policy statement. Additionally, pressure on the external account is underway, in which the import bill has been exceeding $ 5 billion over the past two months, and after January,” he said.
He added that “these factors are creating uncertainty among the traders in connection with the SBP stance in the upcoming policy meetings. The current market is expected to sustain interval, which reduces the calendar at the end of the year. For now, the rate will be 12 percent.”
