July 19, 2007	Thursday	Rajab 03, 1428

KARACHI, July 18: The State Bank on Wednesday accepted bids well-beyond its pre-auction target of treasury bills and kept the cut-off yields unchanged giving no hint about its monetary policy due this month.

On the other hand, banks preferred to invest mostly in 12-month papers was the reflection of their confidence in the current monetary policy as they expected that the central bank was not going to bring any change in prevailing interest rate regime.

The T-bills auction attracted much higher bids almost twice of the Rs30bn target, which reflects that the inter-bank market is brimming with liquidity.

The SBP picked up total Rs52.869 billion through the auction while Rs52.678 billion alone invested for 12-month maturity paper. The cut-off yield of the bench mark six-month papers remained unchanged and attracted just Rs191.5 million.

No bid received for three-month treasury bills. Bankers said that the excess liquidity due to huge influx of foreign exchange could create problem for the banks as they were looking for profitable ventures to place these funds.

“The high economic growth could create more avenues for the consumption of liquidity and it would take at least four to six months to know which sectors would require higher liquidity,” said a banker.