SBP pumps Rs40 billion into banking system

The Central BankKARACHI – The central bank Tuesday injected Rs40 billion into the currency market that seems to be facing a severe liquidity crunch. The State Bank of Pakistan (SBP) pumped over Rs520 billion into the banking system during past fortnight. On Fridays during last two weeks, the regulator had, respectively, injected liquidity worth Rs267 billion and Rs254.25 billion into the rupee-scarce banking system. Tuesday also saw the regulator conducting reverse repo open market operations in the Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs) of 3-day maturity to inject Rs40 billion at 13.35 per cent annual rate of return.

The rate of return for SBP’s reverse repo operations is constantly increasing with the current operation seeing the regulator central bank setting it at 13.35 per cent against 13.26 per cent and 13.22 per cent of the previous operations. Quotation range for the current injection was also increased to 13.40 and 13.25 per cent, compared to the previous two operations’ 13.27 to 13.16 per cent and 13.29 to 13.20 per cent. “Total amount offered at 13.35 per cent was Rs12 billion out of which (the) SBP accepted Rs5 billion,” said the central bank. The economic observers, including SBP, agree that the State Bank injects money into the market through its reverse repo operations when the market faces a liquidity crunch. SBP’s chief spokesman Syed Wasimuddin confirmed that the injection operations are carried out in times of money scarcity in currency market. – Pakistantoday