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Investor interest on quick liquidity:

Demand for short term Treasury bills

The demand of short term Treasury bill yields like the three months maturities has increased in the primary auction at the Central Bank, as most of the investors look for quick liquidity, capital market sources said.

The reason for investor interest for short term maturity like three months rate is very popular as it is much attractive than the normal banking interest along with the high inflation level in the country, capital market sources told the Daily News Business

The Central Bank had recently sought offers for Rs.13.88bn of maturing Treasury bills and received bids worth Rs. 20.30bn. The Government accepted Rs.10.84bn of the offers of primary dealers, its sources said.

The average yield on the three-month maturity Treasury bill was 19.03 percent, up 96 basis points from 17.07 percent and the government issued more than 7 billion bills, which are mostly three months in maturities up to now.

Therefore, demand for six and one year maturities are tend to be declining with the current economic situation in the country, capital market sources said.

Six-month Treasury bills yielded 19.73 per cent on average, and up 94 basis points from 18.79 per cent than a week ago. Bills worth Rs. 2.86 were issued recently.

Last week primary auction for the week ending 18-01-2008 for the re-issue of Rs. 9,750 million maturing Treasury bills was held. The auction was well oversubscribed with bids amounting to Rs. 24,145 million being received. The entire amount offered was accepted from the market.

According to capital market sources investors can either hold a tradable security until maturity or sell in the secondary market prior to maturity at the current market price. Investors can also buy tradable securities already issued to the market by the Central Bank.

Primary Dealers/Commercial Banks quote buying and selling prices of Treasury Bills. Investors can shop around and bargain to obtain attractive market rates for these securities.

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