SBP injects Rs5.6trn into market through reverse repo and Modarabah OMOs

The State Bank of Pakistan (SBP) conducted two types of Open Market Operations (OMOs) on Friday, in which it injected a total of Rs5.6 trillion into the market to provide liquidity support.

According to the SBP, Rs5.3 trillion was injected through a reverse repo OMO for seven days at an interest rate of 7.25 percent. 

The reverse repo OMO is a tool used by the central bank to absorb excess money from the banking system and control inflation.

The remaining Rs200 billion was injected through a Shariah-compliant Modarabah-based OMO for three days at a profit rate of 7.28 percent. 

The Modarabah OMO is a tool used by the SBP to provide Islamic banks with an alternative to conventional OMOs.

The SBP conducts OMOs regularly to manage the money supply and interest rates in the economy. The OMOs are also influenced by the government’s borrowing needs and the foreign exchange reserves situation.