PTBP Web Desk
The State Bank of Pakistan (SBP) has announced a significant injection of liquidity into the market, amounting to Rs2,429.65 billion. This move was executed through reverse repo purchase and Shariah-compliant Modaraba-based Open Market Operations (OMO) on January 3, targeting 7-day and 28-day tenors. The central bank’s operations aim to stabilize liquidity and maintain the financial system’s efficiency.
The SBP conducted its Open Market Operations (OMO) for reverse repo purchase on January 3, with a cumulative injection of Rs2,245.65 billion. The activity involved two tenors—7-day and 28-day—and received 23 bids.
Details of 7-Day Tenor Bids
Number of Bids Received: 10
Total Amount Offered: Rs1,455.8 billion
Rate of Return Range: 13.04% to 13.09%
The SBP accepted Rs1,100 billion of the offered amount at a uniform rate of return of 13.04%. Out of the total Rs427 billion offered at this rate, Rs100 billion was accepted on a pro-rata basis, ensuring fair allocation among bidders.
Number of Bids Received: 13
Total Amount Offered: Rs1,145.65 billion
Rate of Return Range: 13.04% to 13.08%
The SBP accepted all 13 bids for the 28-day tenor, injecting Rs1,145.65 billion at a rate of return of 13.04%. This comprehensive acceptance highlights the central bank’s commitment to addressing market liquidity needs.
In addition to conventional OMOs, the SBP also conducted Shariah-compliant Mudarabah-based operations, injecting Rs184 billion into the market. These operations targeted both 7-day and 28-day tenors, ensuring adherence to Islamic banking principles.
Breakdown of Shariah-Compliant Bids
7-Day Tenor:
Number of Bids Received: 4
Total Amount Offered: Rs179 billion
Rate of Return Range: 13.08% to 13.10%
28-Day Tenor:
Number of Bids Received: 1
Total Amount Offered: Rs5 billion
Rate of Return: 13.08%
The SBP accepted all five bids, injecting Rs184 billion at a uniform rate of return of 13.08%. This dual approach—combining conventional and Shariah-compliant methods—ensures that liquidity needs are met across diverse market participants.
The injection of Rs2.43 trillion by the SBP through these operations is a significant measure to maintain liquidity in the financial system. By addressing the immediate cash flow requirements of banks and financial institutions, the central bank ensures smoother functioning of monetary mechanisms and supports economic stability.
The acceptance of bids at competitive rates—ranging from 13.04% to 13.10%—also reflects the market’s alignment with the SBP’s monetary policy goals. The dual inclusion of reverse repo and Shariah-compliant operations highlights the central bank’s adaptability to diverse banking needs in Pakistan.
Open Market Operations are a critical tool for central banks worldwide. They help manage short-term interest rates and liquidity in the banking system. By engaging in these operations, the SBP actively intervenes to maintain financial equilibrium, aligning market behavior with monetary policy objectives.
