The State Bank of Pakistan injected more than Rs 10.9 trillion into the banking system through open market operations to keep liquidity stable. The move was carried out on October 9.
The central bank lent Rs 10,389 billion through reverse repo operations for 7 and 14 days. Another Rs 519.5 billion was injected through Shariah-compliant operations, officials said.
Why the injection was needed
Banks need enough cash to meet daily needs and lend to businesses. When liquidity runs low, the central bank steps in to provide short-term funds against government securities.
The accepted rate of return was around 11.51 to 11.54 per cent, close to the policy rate of 11.5 per cent.
What it means
Regular liquidity support keeps the money market running smoothly. It also helps banks continue lending to the private sector without sudden jumps in borrowing costs.
Analysts said the central bank will likely keep using such operations in the coming weeks. They noted that liquidity needs usually rise around salary and tax payment dates.
The operations also help keep short-term interest rates near the policy rate. Without them, rates could swing sharply and create uncertainty for banks and borrowers.
Bankers welcomed the move, saying it gives them confidence to plan lending. They added that smooth liquidity is vital for businesses that rely on working capital loans.
The central bank carries out such operations almost every week. Market players see them as a sign that the SBP is watching liquidity levels closely. Officials said the next operation will be announced as per the usual weekly schedule.
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