Analysts said that the lower-than-expected inflation numbers fueled speculations of a possible rate cut in the next monetary policy to be announced later this month. Banks aggressively participated in the auction and submitted bids amounting to Rs 425 billion against the target of Rs 100 billion.

The federal government raised Rs 109.6 billion in the auction against a maturity of Rs 389 billion. The cut-off yields of all long-term bonds, except 20-year variety, came down by 15-46 bps in the auction. With Rs 38.35 billion borrowing, the cut-off yield of 3-year PIBs was set at 11.5888 percent, down 46bps.

The cut-off yields of 5-year bond declined by 41 bps to 10.99 percent and bids amounting to Rs 32.15 billion were accepted. Similarly, margin of 10-year long-term bond was fixed at 10.85 percent, down 15bps and an amount of Rs 38 billion was raised. Some Rs 1 billion were also borrowed through the sale of 20-year bonds at 11.799 percent.

Copyright Business Recorder, 2020