The State Bank of Pakistan raised Rs 53.986 billion through sale of 12-month treasury bills on Wednesday on yields unchanged from previous auction, signalling that it doesn’t want to raise yields any further for the time being.

It also kept the yield on three- and six-month treasury bills unchanged, raising Rs 1.96 billion and Rs 478 million, respectively. The banks had offered Rs 1.96 billion, Rs 478 million, and Rs 77.05 billion, respectively.

“They are sending a soft signal that they are not willing to raise the yield,” said a treasury official at a commercial bank. The market is set to receive over Rs 80 billion through the maturities of a previous open market operation and a treasury bill auction on Thursday. This will keep the market liquid and the central bank is likely to conduct an OMO soon to siphon off excess liquidity.

“It looks like they are not going to raise the interest rates any more because if they do the rate on 12-month paper would reach near the discount rate,” said the bank official.

The State Bank is expected to announce its monetary policy for the next six months by the end of this month. Treasury officials said that they expected no major change in the monetary policy.

Posted: 07|5|07 at 10:12 am. Filed under: Auction News.