KARACHI: The cut-off yields on three-month treasury bills (T-bills) were further increased by 25 basis points in the auction on Wednesday, leading to a 127-basis point increase since the last monetary policy announced in August.

The government had rejected the six-month T-bills in the previous auction. However, on Wedne­sday it accepted higher returns as it increased the cut-off yields by 31 basis points — the rate increased by 101 basis points since the last monetary policy.

The government raised Rs285 billion through the three and six-month T-bills and rejected all bids for 12-month papers. However, once the again the government remained much below its target set for this auction with Rs500bn.

In the absence of State Bank’s financing, the government depends largely on banks’ money to meet the expenses but the banks are eager to get higher returns knowing well the needs of the government.

Published in Dawn, November 4th, 2021