In a significant move to stabilize market liquidity, the State Bank of Pakistan (SBP) injected Rs2,429.65 billion into the financial system on January 3, 2025. This action was carried out through reverse repo purchases and Shariah-compliant Mudarabah-based Open Market Operations (OMO), as part of the central bank’s ongoing efforts to ensure adequate liquidity and maintain market stability.
As part of its Open Market Operations, the SBP accepted 23 bids, totaling Rs2,245.65 billion, split between 7-day and 28-day tenors. The bank received 10 bids for the 7-day tenor and 13 bids for the 28-day tenor. The offered amounts ranged between Rs1,455.8 billion for the 7-day tenor and Rs1,145.65 billion for the 28-day tenor, with return rates fluctuating between 13.04% and 13.09% for the former and 13.04% and 13.08% for the latter.
Out of the total offered amount, the SBP accepted Rs1,100 billion for the 7-day tenor at a return rate of 13.04%. The total amount offered at this rate was Rs427 billion, but the central bank accepted only Rs100 billion on a pro-rata basis. For the 28-day tenor, the central bank accepted all 13 bids worth Rs1,145.65 billion, maintaining the same return rate of 13.04%.
In addition to the reverse repo operations, the SBP also conducted Shariah-compliant Mudarabah-based Open Market Operations, which are in line with Islamic financial principles. The bank received a total of five bids—four for the 7-day tenor, amounting to Rs179 billion, and one for the 28-day tenor, offering Rs5 billion. The rates offered for the 7-day tenor ranged from 13.08% to 13.10%, while the 28-day bid came in at a rate of 13.08%. The SBP accepted all five bids, injecting a total of Rs184 billion into the market at a rate of 13.08%.
This financial maneuver underscores the SBP’s ongoing efforts to manage market liquidity effectively. By injecting such a large sum, the central bank is ensuring that there is enough capital circulating in the economy to support government and corporate financing needs, as well as to maintain the stability of Pakistan’s financial system. The liquidity injection also serves as a tool to manage short-term interest rates while addressing any potential inflationary pressures in the economy.
The reverse repo transactions, which are typically used for short-term liquidity management, and the Shariah-compliant Mudarabah-based OMO are crucial components of the SBP’s broader monetary policy framework. They allow the central bank to balance liquidity requirements with inflation control, thus ensuring that Pakistan’s financial system remains resilient in a volatile economic environment.
This latest liquidity injection highlights the SBP’s proactive stance in managing Pakistan’s economic landscape, particularly in light of global financial uncertainties and domestic challenges. These operations not only support banking institutions but also create a conducive environment for businesses, investors, and consumers by ensuring steady access to financial resources.
As Pakistan continues to work through its economic challenges, the SBP’s monetary actions will play a key role in shaping the nation’s economic trajectory. The central bank’s interventions are pivotal in creating a stable financial environment, which is essential for fostering growth, boosting investor confidence, and ensuring that the economy remains on a sustainable path.