KARACHI: The government rejected all bids for treasury bills on Wednesday, apparently to borrow at a cheaper rate in the next auction.

The State Bank of Pakistan reduced its policy rate by 200 basis points to 17.5 per cent on Sept 12, and cutoff yields on T-bills were already at this rate before the announcement.

The market experts termed the move surprising since the government depends mainly on banking money to run its day-to-day affairs. Most of the revenue goes for debt servicing each year.

The investors placed total bids of Rs1,425bn, three times higher than the target.

The 12-month T-bills saw significant interest, with bids totalling Rs925bn, representing 65pc of the total bid amount. For the three-month T-bills, bids amounted to Rs222bn, while six-month papers attracted Rs279bn, accounting for 20pc of the total bids.-Staff Reporter