KARACHI: The State Bank of Pakistan (SBP) Wednesday sold Treasury Bills (T-Bills) worth Rs 35.266 billion in regular auction, rejecting bids of the dealers for 12-month paper.

Two days back, the central bank had set a pre-auction target of Rs 95 billion, as there is a maturity of Rs 98 billion in the money market on Thursday.

The State Bank raised highest amount of Rs 34.945 billion for 3-month paper at 12.56 percent cut-off yield per annum, while the dealers offered amount of Rs 60.245 billion.

A dealer said the banks are participating in the auction for a short term as the interest rates are likely to increase further. The central bank accepted Rs 321 million in six-month paper at 12.68 percent, while the dealers offered Rs 771 million.

However, the State Bank totally rejected Rs 50 million bids of the primary dealers for 12-month paper.

In last two weeks, the banking system is facing short of liquidity, while the State Bank injected around Rs 46 billion in last two days. The banks also used discounting window of the State Bank to overcome the liquidity problem.

“The banking system is under heavy liquidity pressure ahead of Eidul Fitr,” said a money market expert said. Liquidity problem would continue till next few days.

A dealer said the bankers offered higher rates for this auction as they don’t want to give all money to the State Bank because of the liquidity shortage. On Thursday, there will be an outflow of Rs 6.52 billion from the sale of 3-year Ijara Sukuk. staff report