T-Bills Indicate Monetary Tightening

January 2005 | Market Strategy

Despite a stabilisation of the rupee, Pakistan looks set for a period of monetary tightening, as indicated by higher yields on benchmark 6-month T-bills at their latest monthly auction, on January 5. The State Bank of Pakistan (SBP) sold some PKR26.89bn (US$451.35mn) worth of these instruments at an average yield of 4.00%, compared with 3.45% at the last successful auction of November 10. An auction on December 8 saw the SBP reject all bids on the grounds that rates offered by banks were too high. The jump in yields - by 55bps - indicates strong monetary tightening ahead.

If you would like to subscribe to Emerging Markets Monitor and gain instant access to this article, please click here to subscribe.

If you would like to take a trial to Emerging Markets Monitor please click on the trial link below.