Qudsia Bano

Market experts believe the State Bank of Pakistan’s latest move to inject Rs12.45 trillion liquidity into the banking system through an open market operation (OMO) signals a careful balancing act between maintaining financial stability and easing liquidity pressures in the market, reports WealthPK.

According to Dr. Hamid Haroon, former economist at the central bank, the injection shows that the central bank is trying to ensure money market stability while avoiding unnecessary tightening at a time when commercial banks face a higher demand for liquidity. He explained that an OMO of this size usually reflects tightness in the interbank cash positions caused by factors like government borrowing or seasonal cash withdrawals.

The recent data released by the SBP shows that in the 7-day tenor, six bids worth Rs195.2 billion were accepted at a return of 11.04 percent per annum. In the 14-day tenor, 29 bids amounting to Rs12.26 trillion were accepted at 11.01 percent. This brought the total accepted amount to Rs12.45 trillion, with every bid received being accommodated, indicating the central bank’s strong support for market liquidity.

Financial analyst at First National Equities Fahad Raza noted that the narrow difference in the accepted rates of return demonstrates the central bank’s effort to keep short-term interbank rates aligned with its policy rate. “By ensuring that liquidity remains available at rates close to the policy level, the central bank is sending a clear message that it does not want volatility in the money markets at this stage,” he said.

Experts further highlight that while liquidity injections are a routine part of the SBP’s monetary management toolkit, the scale of this particular operation reflects the strain faced by banks in meeting the settlement needs. Such operations, they argue, help ease immediate pressures but also underline the challenges of balancing inflation control with maintaining financial sector stability.

Going forward, economists believe the reliance on OMOs is likely to continue, particularly if fiscal borrowing remains heavy and demand for liquidity in the banking system stays elevated. For now, the operation reinforces the SBP’s dual responsibility as both a liquidity manager and a stabilizer for Pakistan’s financial markets.

Credit: INP-WealthPk