The State Bank of Pakistan (SBP) carried out a significant Open Market Operation (OMO) on Wednesday, injecting a total of Rs12.68 trillion into the market. Of the total amount, Rs12.4 trillion was injected through conventional reverse repo operations, while Rs228 billion was facilitated via Shariah-compliant Modarabah-based OMO.
The conventional reverse repo transaction involved two key tenors:
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7-Day Reverse Repo: Offered Rs195.2 billion, with an accepted rate of 11.04%, accepted fully.
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14-Day Reverse Repo: Rs12.26 trillion, accepted at a rate of 11.01%.
In addition to the conventional operations, the Shariah-compliant Modarabah-based OMO comprised:
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7-Day Reverse Repo: Rs170 billion, accepted at 11.13%.
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14-Day Reverse Repo: Rs58 billion, also accepted at 11.13%.
This move is part of SBP’s ongoing strategy to address liquidity shortages in the market by providing funds to eligible banks and primary dealers (PDs) against government securities.
OMO is a tool used by SBP to either inject or mop up funds in the banking system, depending on liquidity needs. In case of OMO (injections), SBP lends funds to banks or PDs against marketable government securities such as Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs).
For OMO (mop-up), SBP sells MTBs to banks to absorb surplus liquidity, while in Shariah-compliant operations (Bai-Muajjal), GOP Ijara Sukuk are used as eligible securities.
The regulatory body emphasized that the new OMO operations were designed to ensure smooth functioning of liquidity channels while continuing to support the country’s banking system. The funds released under these operations are expected to stabilize the system and promote healthy economic activity.
These developments come amid ongoing efforts to modernize liquidity management tools, with particular emphasis on incorporating Shariah-compliant financial solutions alongside conventional methods.
The total Rs12.68 trillion injection represents a crucial intervention aimed at addressing ongoing liquidity challenges and ensuring sufficient funds within the financial system.
