Qudsia Bano

The State Bank of Pakistan (SBP) conducted liquidity injections of over Rs554 billion on Thursday, through both conventional and Shariah-compliant open market operations (OMOs). The move reflects the central bank’s efforts to manage liquidity pressures in the banking system and provide short-term stability to money markets.

Under the conventional reverse repo operation, the SBP invited bids for a four-day tenor. Banks placed bids amounting to Rs545.4 billion, out of which Rs544 billion were accepted. The realized value of the accepted amount stood at Rs528.6 billion. The rate of return was set at 11.06 percent per annum. A total of ten quotes were received, and eight were accepted, indicating healthy participation from commercial banks.

Alongside this, the SBP also carried out a Shariah-compliant Mudarabah-based OMO to cater to Islamic banking institutions. In this operation, a single bid worth Rs10 billion was offered and fully accepted. The realized value of the injection was Rs10.36 billion, with the accepted rate of return recorded at 11.14 percent.

Combined, the two operations resulted in a liquidity injection of more than Rs554 billion into the financial system. Such operations are a regular tool used by the central bank to manage day-to-day liquidity conditions and ensure that banks have adequate funds to meet their short-term needs.

The frequent liquidity injections highlight the tight cash positions banks have been facing due to large government borrowing and external repayment pressures. By offering both conventional and Islamic instruments, the SBP aims to address the requirements of all segments of the financial sector while maintaining stability in the money market.

Credit: INP-WealthPk