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Auction Result: SBP Sells T-Bills worth Rs.404.63 Billion

December 02, 2020 (MLN): The State Bank fo Pakistan(SBP) conducted an auction on Wednesday in which it sold Market Treasury Bills (MTBs) worth Rs.404.63 billion for 3, 6 and 12 months.

Auction target was Rs.350.00 billion against a maturing amount of Rs.429.20 billion.

Cut off yield for 3, 6 and 12 months were 7.1408, 7.1849 and 7.2989 percent.

Total amount offered was Rs.763.84 billion out of which the SBP accepted Rs.382.35 billion. The SBP received bids worth Rs.673.84 billion for 3 months, Rs.60.00 billion for 6 months and Rs.30.00 billion for 12 months out of which it accepted Rs.322.35 billion, Rs. 50.00 billion and Rs.10.00 billion respectively.

In addition the SBP picked up Rs.22.28 billion from the non-competitive auction, making the total amount accepted Rs.404.63 billion.

 

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PIB Auction: Bid Pattern (Floating Rate)

December 02, 2020 (MLN): SBP released the Bid pattern for today's Auction of Quarterly payment PIB (Floating Rate).

Combined Auction Target is Rs.140.00 Billion for 3, 5 and 10 year Bonds, which will be a fresh issue for the Semi-Annual Coupon bond and a re-opening of the Oct 22, 2020 issue for quarterly coupon bonds while the 2 year PIB is re-opening of Nov 05, 2020 issue.

Semi annual PIB coupon rates are 7.1959 percent for 3, 5 and 10 years.

Quarterly PIB coupon rates are 7.1402 percent for 2 years and 7.1178 percent for 3, 5 and 10 years.

Link to Full Bid Pattern (Quarterly)


* Link for Semi Annual PIBs bid pattern will be added as soon as published by SBP.

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MTB Auction: Bid Pattern

December 02, 2020 (MLN): The State Bank of Pakistan released the Bid Pattern for today's MTB Auction.

Auction target is Rs.350.00 billion against a maturing amount of Rs.429.20 billion, showing a net retirement of Rs.79.20 Billion.

Link to Full Bid Pattern

In the previous auction cut off yield for 3, 6 and 12 months was 7.1525, 7.1998 and 7.2498 percent.

 

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CPI Review: Inflation to continue moderation in short-to-medium term

December 2, 2020 (MLN): The headline inflation for the month of Nov’20 decelerated to 8.35%YoY and 0.82% MoM, compared to 8.91% YoY and 1.7% MoM in the previous month, bringing the 5MFY21 CPI inflation to 8.76% YoY.

To highlight, this inflation figure came in slightly higher than market expectations, despite higher base effect.

The reasonable easing in November’s inflation figures has been witnessed mainly on the back of declining pace of inflation in food group and deflationary trend in housing and transportation index.

The Food & Non-Alcoholic Beverages inflation slowed down to 1.92% MoM from 3.90% in Oct’20, whereas, on yearly basis, the food index spiked to 15.1% YoY during the month. Moreover, a detailed examination of the key components within the group reveals that most of the increase in Food inflation was attributed to Chicken and vegetables. The price of chicken surged by 21.36% MoM, while Tomatoes by 15.68% MoM and Potatoes by 8.79% MoM. On the other hand, pressure on wheat and flour prices dropped by 4.83% and 4.1% MoM respectively.

The respite in inflation of transportation index came on the back of decline in motor fuel prices and transportation services by 2% and 2.25% MoM in the group respectively, which declined the overall group’s inflation by 2.25%.

Similarly, Power charges under Housing group declined 3.20% MoM and increased 9.89% YoY, dragging the overall Housing rent, Water, Electricity, Gas & other group inflation by 0.08% MoM in Nov’20.

On the other hand, the Core inflation remained firm during the month, particularly core urban inflation which remained unchanged at 5.6% YoY in Nov’20. While, a slight improvement in Core rural inflation has been recorded as it improved by 7.4% YoY, compared to 7.6% YoY in October and 7.8% YoY in September 2020.

Outlook:

With the recovery in international oil prices amid vaccine hopes and extension in production cuts, further revision in POL prices domestically is expected under the revised mechanism. The same is expected to support headline inflation in the coming months, says Taurus Securities.

Another report by Arif Habib Securities expects headline inflation to continue moderation in monthly inflation trend. One major factor supporting this expectation of contained inflation in short-to-medium term is reversal in volatile food prices.

To recall, SBP in its recent MPS kept policy rate unchanged and highlighted that there seems little to no threat on inflation from the demand side as aggregate demand still remains subdued thus, negating the fear of over-heating of the economy.

The core inflation, on the other hand, has been relatively stable. This should help SBP maintain status quo in the next MPS as well which is due in January’21, the report added.

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SBP issues regulatory framework to facilitate business to consumer...

December 02, 2020: State Bank of Pakistan (SBP) has issued a regulatory framework to facilitate Business-to-Consumer (B2C) e-Commerce exports from Pakistan. Under the new regulatory framework, the mandatory requirement of ‘Export’ (E) form has been done away with and now an exporter can export goods up to USD 5,000/- per consignment without the requirement of ‘E’ Form.

This step will facilitate exports in small quantities directly to consumers. This will also help small entrepreneurs and exporters who typically export varied goods in small quantities and find it cumbersome to fulfill the detailed requirements of E Form that is mainly designed for bulk exports. 

Lately, the global emerging trends especially in the consumer market place have seen a major shift from the traditional marketplace to e-commerce due to the advent of new technologies. A surge in this trend was particularly witnessed during the global lockdown owing to the COVID-19 pandemic. In line with these trends, SBP focused on facilitating cross border trade for B2C (Business to Consumer) exports from Pakistan, including by small entrepreneurs and exporters. This was aimed at improving the competitiveness and digital connectivity of Pakistani businesses with the global market during the development phase of the e-Commerce Policy.

It merits mentioning here that up till now, goods from Pakistan could only be exported after certification of Electronic/ Manual Export (‘E’) Form-E by the Authorized Dealers (ADs) and subsequent filing of Goods Declaration by the customers with Pakistan Customs. The ‘E’ Form was required for each shipment with a complete description of the goods being exported and had been designed keeping in view the export of large quantities of homogenous goods. However, for exports of small value different items to individuals destined for a different jurisdiction, (as is the case in B2C e-commerce exports) the existing process was not conducive.

Earlier, in 2000, SBP had issued regulatory instructions to promote B2C e-Commerce, in Foreign Exchange Manual, with a primary focus on the opening of an Internet Merchant Account to facilitate e-commerce. However, with the advancement in technology, these instructions needed to cater to the current business dynamics of e-commerce and therefore required to be replaced. Accordingly, SBP collaborated with the relevant stakeholders including the business community, Pakistan Customs, Ministry of Commerce, courier companies and banking industry in a bid to develop a regulatory framework, which not only addresses the market needs but also takes into account regulatory objectives.  

The new regulatory framework would address the pressing demand of e-commerce exporters, including the small entrepreneurs, besides providing the much-needed impetus for the recognition and growth of e-commerce exports from Pakistan. It would also pave the way for the big corporate brands, SMEs, and startups, to enter the global consumer markets and contribute to the export earnings of the country. The new regulatory framework is expected to be beneficial in improving the country's rating in the Ease of Doing Business index. Moreover, this framework would also help in documenting the exports of small shipments, which earlier could not be included in the formal exports of the country due to the absence of any such framework.

The instructions are available at https://www.sbp.org.pk/epd/2020/FEC7.html

Press Release

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