March 15, 2007	Thursday	Safar 25, 1428

KARACHI, March 14: The State Bank slightly increased the cut-off yield on 12-month treasury bills in an auction held here on Wednesday. Banks only made bids for 12-month papers.

The trend of investment in the government securities showed that the banks had been getting best returns on their risk-free investment in longer tenure treasury bills.

The State Bank received no bid for six-month or three-month bill.The cut-off yield on 12-month T-bills rose to 9.01 per cent from 9.00 per cent. The increase was minute and not attractive with any significant change, however the banks believed that cut-off yield on the one-year papers was the best in the wake of prevailing interest rate scenario, dealers said.

It shows confidence of the banks in prevailing monetary policy as there is no hope for any rise in the interest rates in the coming months, market experts observed.

The SBP had set auction target of Rs16 billion, but it accepted all the bids of Rs24.82 billion received for 12-month bills.

“There is no hope for increase in rates in the next auction,” said a banker. He said that the current inflation trend would not allow the SBP to go for further hike in the rates which could increase the cost of borrowing and ultimately push the prices high.