Pakistan’s money market remained under pressure as KIBOR continued to rise, staying above the State Bank of Pakistan’s policy rate of 11.5 percent.

Borrowing costs have increased amid tight liquidity conditions, strong government financing needs, and expectations that interest rates may remain elevated for longer.

As of May 20, KIBOR across major tenors from 1-week to 1-year ranged between 11.84 percent and 12.79 percent, reflecting a premium over the policy rate.

In the latest Treasury Bill auction, total participation reached Rs 1,733 billion, while the government raised Rs 688 billion against a target of Rs 450 billion and maturities of Rs 479 billion. Yields increased by 9–86 basis points, indicating continued pressure in short-term funding markets.

Overall, the trend suggests tighter liquidity conditions and higher demand for returns in the money market, which may gradually translate into higher yields on new fixed-income instruments.