March 28, 2006	Tuesday	Safar 27, 1427

KARACHI, March 27: State Bank on Monday mopped up Rs6 billion from the inter-bank market but the rates remained in moderate range. The money market was slightly liquid during the day and the SBP found it against its policy and sucked in Rs6 billion for three days.

The overnight rate remained in the range of 7 to 7.5 per cent. However, the SBP picked up the liquidity at a return of 8 per cent.

Meanwhile, the SBP invited tenders for the auction of treasury bills on Wednesday and set a target of Rs14 billion. Market experts said they were expecting that the same amount (Rs14bn) of inflows through maturity of security papers.

However, there was no hope for the change in the cut off yield of the T-bills. Experts said that the State Bank’s tight monetary policy, which will continue till the end of the current fiscal, had no option for increase in the interest rates.

They said that the interest rates had already gone up in case of credit lending to the private sector and the reason was high inflation, which is about 8.5 per cent. Banks’ lending to the private sector has been going up steadily and most of their earnings are coming from the interest based incomes. Banks have kept the return on deposits at the lowest side while the lending rates are gradually going up which resulted in higher earnings for them.