The State Bank of Pakistan (SBP) injected Rs774 billion into the financial system through a one-day Open Market Operation (OMO) Reverse Repo Purchase on Thursday, reflecting the central bank’s continued efforts to maintain adequate liquidity and ensure stability within the interbank market. The operation, designed to support short-term funding needs across banks, underscores the SBP’s ongoing liquidity management strategy as it works to keep money market operations smooth and interest rates aligned with policy objectives. According to data shared by the central bank, the liquidity injection carried a face value of Rs774 billion and a realized value of Rs741.77 billion, shaped by the discounting mechanism typically applied in such operations. The cut-off rate for the OMO was set at 11.10%, which determines the cost at which participating banks accessed funds from the SBP for this short-duration liquidity support.
The central bank confirmed that it received five bids for the operation and accepted all of them, reflecting notable demand for liquidity among market participants. With the OMO scheduled to mature on November 7, 2025, the one-day tenor highlights the SBP’s commitment to using short-term tools to smooth out daily liquidity swings and prevent volatility in overnight lending rates. These operations play a crucial role in Pakistan’s monetary transmission framework, allowing the SBP to modulate market liquidity while ensuring banks can meet settlement requirements and maintain normal credit flows.
Liquidity conditions in Pakistan’s financial system often fluctuate due to a combination of government cash flows, treasury operations, corporate settlements, and broader macroeconomic pressures. In such an environment, OMOs are a key stabilizing tool that allow the central bank to intervene quickly, providing banks with the funding needed to manage short-term mismatches. Analysts view this injection as part of the SBP’s routine approach to managing liquidity, helping to anchor interbank rates and avoid unnecessary stress on financial institutions. A well-functioning interbank market is essential for keeping borrowing costs predictable, supporting government securities participation, and enabling banks to manage their investment and lending portfolios without disruption.
By ensuring sufficient liquidity through OMOs, the SBP helps maintain broader financial stability, especially during periods when market dynamics are affected by fiscal operations or external sector movements. The smooth operation of these short-term interventions also contributes to the effective transmission of monetary policy, allowing the central bank’s decisions on base rates to flow consistently through the financial system. As Pakistan continues to navigate evolving economic conditions, liquidity injections such as this one reinforce the SBP’s role in supporting financial institutions and safeguarding the overall stability of the banking ecosystem.
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