6-month KIBOR rate drops to  21-month low of 17.10%

KIBOR (Karachi Interbank Offered Rate) has witnessed a notable decline following the State Bank of Pakistan's (SBP) decision to reduce its policy interest rate by 200 basis points on September 12, 2024.

The 1-week KIBOR rate dropped by 119 basis points to 17.95%. Meanwhile, the 3-month, 6-month, and 12-month KIBOR also witnessed notable reductions of 48, 57, and 25 basis points, respectively.

The 3-month, 6-month, and 12-month KIBOR now stands at 17.34%, 17.10%, and 16.94%, respectively. These reductions suggest that borrowing costs for corporates will decrease across varying time horizons.

The 6-month KIBOR, a key indicator for corporate lending, now stands at 17.10%, its lowest level since January 4, 2023.

This reduction could provide much-needed relief to businesses such as cements, steel, textiles and autos etc., by lowering their cost of borrowing, potentially boosting investment and economic growth.

Lower KIBOR rates make it cheaper for companies to finance operations, expand, and invest in new projects.

KIBOR serves as a benchmark for banks when lending to the corporate sector.

Overall, the drop in KIBOR rates signals a shift towards a more supportive financial environment that could enhance credit flows, reduce debt-servicing costs, and potentially pave the way for an economic rebound.