The State Bank of Pakistan (SBP) conducted two Open Market Operations (OMOs) on Friday, to inject over Rs 500 billion into the money market through conventional and Shariah-compliant mechanisms.
According to the Domestic Markets and Monetary Management Department, the SBP accepted bids worth Rs 382.8 billion from commercial banks for 7-day and 28-day reverse repo purchase contracts at an interest rate of 22.07% per annum in the conventional OMO.Â
The SBP received 16 bids from commercial banks for the OMO, out of which 10 were accepted. The SBP received five bids worth Rs. 343.05 billion for the 7-day contract, out of which three bids worth Rs. 228.05 billion were accepted.Â
The central bank also received 11 bids worth Rs. 200.3 billion for the 28-day contract, out of which seven bids worth Rs. 154.75 billion were accepted.
The OMO aimed to ease the tight liquidity conditions in the money market, as the interbank overnight rate had risen to 22.5% on Thursday, February 15, 2024.Â
Shariah Compliant Mudarabah-based OMO
The SBP also conducted a Shariah Compliant Mudarabah based OMO, injecting Rs 121 billion into the money market for various tenors.Â
The OMO received five quotes for 07-day and 28-day tenors, with a total amount offered of Rs 121 billion. The SBP accepted all the quotes at the cut-off rates of 22.08% and 22.07% for 07-day and 28-day tenors, respectively.Â
The OMO is part of the SBP’s efforts to provide liquidity to the Islamic banking industry and promote the development of the Shariah-compliant money market.Â
The SBP has been conducting regular OMOs since 2018, using government-issued Islamic bonds (sukuk) as collateral.
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