SBP injects over Rs4.6 trillion into banks through open market operations

ISLAMABAD: The State Bank of Pakistan (SBP) on Monday pumped more than Rs4.6 trillion into the banking system through conventional and Shariah-compliant open market operations (OMOs) to ease tight liquidity conditions in the inter-bank market.

The central bank carried out reverse repo purchase operations for two-day and four-day tenors, accepting a combined Rs4.388 trillion against total offers of Rs4.865 trillion.

Under the conventional OMO, the SBP accepted Rs138 billion for two days at 11.55%. For the four-day tenor, it took in Rs4.25 trillion at 11.53%. The larger share of the liquidity support came through the four-day operation, indicating stronger demand from banks for slightly longer-duration funding.

The total realised value of accepted bids was Rs4.228 trillion. The SBP accepted bids on a pro rata basis at the cut-off rate of 11.53%, showing that bids at that level exceeded the amount the central bank was willing to take.

Alongside the conventional operation, the SBP also conducted a Mudarabah-based Shariah-compliant OMO, injecting Rs240 billion for four days. The accepted rate in that segment was 11.59%.

The amount offered under the Shariah-compliant operation was Rs338.5 billion. Here too, the central bank made partial acceptance on a pro rata basis because demand at the cut-off rate was higher than the amount accepted.

Market analysts said such sizeable injections point to continuing liquidity stress in the banking system, driven by government borrowing needs.

Rupee edges up

In the inter-bank market, the Pakistani rupee posted a marginal gain against the US dollar. The local currency strengthened by Re0.01 to close at 278.76, compared with 278.77 in the previous session.

Gold and silver prices fall

Gold prices in Pakistan dropped sharply in line with losses in the international bullion market, where prices came under pressure amid a stronger dollar and changing geopolitical tensions.

According to the All-Pakistan Gems and Jewellers Sarafa Association, the price of gold per tola in the local market fell by Rs3,800 to Rs479,962. The price of 10 grams of gold also declined by Rs3,257 to Rs411,490.

Silver prices also moved lower, falling by Rs100 to Rs7,914 per tola.

In the international market, spot gold was down 1.9% at $4,526.88 per ounce, while US futures fell 2.3% to $4,537.90 per ounce, indicating continued selling pressure.

Interactive Commodities Director Adnan Agar said the market was standing at a lower level, with prices fluctuating between a high of $4,640 and a low of $4,524. He said they were later hovering near $4,540.

Agar said recent tensions involving Iran, including reports of attacks on ships, had added to uncertainty. He said that although the United States had denied that it was their ship, the situation pointed to a potential low-scale conflict, which had paradoxically weighed on gold because rising oil prices were strengthening the dollar.

Looking ahead, he said gold had strong technical support in the $4,400-4,440 range, suggesting it was unlikely to fall below that level and could see a reversal.