SBP Injects Massive Rs2.2 Trillion to Sustain Market Liquidity
In a significant move to bolster financial stability, the State Bank of Pakistan (SBP) executed a substantial liquidity injection on Friday, deploying a total of Rs2,198.8 billion through a combination of Reverse Repo Purchase and Shariah-compliant Mudarabah-based Open Market Operations (OMOs). This strategic intervention aims to maintain adequate liquidity levels in the market, supporting economic activities and ensuring smooth banking operations.
Details of the Reverse Repo Purchase Operations
The central bank conducted the Open Market Operation, specifically a Reverse Repo Purchase (Injection), for both 7-day and 14-day tenors on January 23, 2026. For the 14-day tenor, the SBP received no bids, indicating a lack of demand for longer-term liquidity at this juncture. However, for the 7-day tenor, the bank received 14 quotes, cumulatively offering Rs1,648.8 billion. The rate of return for these bids ranged between 10.51 to 10.56 percent. In response, the SBP accepted all the bids, injecting the entire amount at the lower end of the range, specifically at a 10.51 percent rate of return.
Shariah-Compliant Mudarabah-Based OMO Highlights
Simultaneously, the SBP also carried out Shariah-compliant Mudarabah-based Open Market Operations for the same 7-day and 14-day tenors. Similar to the Reverse Repo, no bids were submitted for the 14-day tenor. For the 7-day tenor, the bank received 6 quotes, offering a total of Rs644 billion at rates between 10.51 to 10.56 percent. The SBP accepted Rs550 billion against these 6 bids, again at a 10.51 percent rate of return. Notably, out of the total amount offered at 10.51 percent, which was Rs153 billion, the central bank accepted Rs59 billion on a pro-rata basis, demonstrating a selective approach to manage liquidity effectively.
Context and Implications for the Market
This liquidity injection by the SBP is a critical measure to address potential short-term cash shortages in the banking system, ensuring that financial institutions have the necessary funds to meet their obligations and support lending activities. By utilizing both conventional and Shariah-compliant instruments, the central bank caters to a diverse range of market participants, reinforcing its commitment to inclusive financial practices. The acceptance of bids at the lower rate of 10.51 percent suggests a focus on cost-effective liquidity management, which could help stabilize interest rates and foster a conducive environment for economic growth.
In related economic news, cement exports have shown a positive trend, increasing by 3.40 percent to reach $173.17 million, indicating resilience in the industrial sector despite broader market challenges. This development, coupled with the SBP's proactive liquidity measures, underscores the ongoing efforts to navigate economic fluctuations and promote sustainable development in Pakistan.
