On Wednesday, State Bank conducted three and
twelve-month T-bill auction with a pre-auction target of Rs50 billion.
Banks put in bids worth Rs11.0 billion — mostly for the three-month
paper. Bids worth Rs76.80 billion were accepted in the three-month
paper at a cut-off yield of 5.0107% and Rs2.60 billion in the one-year
paper at 5.9785%. Demand for T-bill was seen in secondary market and
trades in the latest three-month T-bill were struck around 4.85%.
Excess liquidity in the system during most part of
the past week kept rates on the lower side. Activity in the overnight
tenor was seen in a wide band of 0.25% to 4.50% — starting on the
lower side and firming after the State Bank intervened through an OMO
and accepted a total of Rs9.50 billion in two weeks. After this
outflow, rates hiked to 4.50% temporarily and finally eased to below
One and two-week trades saw a similar trend where
initial activity was around 1.50% and 2.50% but as the week progressed
rates were seen as high as 4.50% and 4.00%, respectively. One-month
funds traded between 3.50% and 4.75%. Three and six-month tenor saw no
major activity but rate were quoted in a hand of 4.500/0 and 5.10% for
three-month and between 5.10% and 5.60% for six-month.