ISLAMABAD: In a strategic move to manage liquidity within the financial system, the State Bank of Pakistan (SBP) executed a substantial Open Market Operation (OMO) today, injecting a cumulative Rs9.22 trillion into the market. The bulk of this injection, approximately Rs9.1 trillion, was facilitated through the reverse repo OMO, a conventional liquidity adjustment tool.
Detailed breakdown of reverse repo OMO:
– Tenure: 7 days
– Type: Reverse Repo (Injection)
– Amount Offered: Rs9,287.3 billion
– Amount Accepted: Rs9,100 billion
– Rate Range: 19.65% – 19.56%
– Rate Accepted: 19.56%
– Number of Quotes: 31
– Tenure: 28 days
– Type: Reverse Repo (Injection)
– Amount Offered: Rs3 billion
– Amount Accepted: Rs3 billion
– Rate Range:** 19.62%
– Rate Accepted:** 19.62%
– Number of Quotes: 1
Beyond this, the SBP also injected an additional Rs115 billion using a Shariah-compliant Modarabah-based OMO, catering to the needs of the Islamic banking sector.
Detailed breakdown of Shariah-compliant OMO:
– Tenor: 7 days
– Type: Reverse Repo (Injection)
– Amount Offered: Rs115 billion
– Amount Accepted: Rs115 billion
– Rate Range: 19.60%
– Rate Accepted: 19.60%
– Number of Quotes: 2
Understanding SBP’s Liquidity Management Tools:
The SBP employs Open Market Operations (OMO) to either inject funds into or mop up liquidity from the banking system, depending on current market conditions. In the case of liquidity shortages, the SBP lends funds to banks and Primary Dealers (PDs) against government securities like Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs) through the reverse repo mechanism.
For Shariah-compliant operations, the SBP uses tools like Bai-Muajjal, where GOP Ijara Sukuk serve as the eligible securities. This ensures that Islamic banks and specialized Islamic windows within conventional banks can effectively manage their liquidity needs in alignment with Shariah principles.
This strategic liquidity injection by the SBP highlights the central bank’s commitment to maintaining stability and ensuring that the banking system operates smoothly, especially in times of fluctuating market liquidity.
