SBP injects Rs11 trillion into market, eases liquidity pressure amid government borrowing

The State Bank of Pakistan (SBP) injected around Rs11 trillion liquidity into the financial system on Friday through conventional and Shariah-compliant Open Market Operations (OMOs), reflecting continued tightness in the interbank market as the government itself is the biggest borrower in the market.

Under the Shariah-compliant Mudarabah-based OMO, the central bank, through its Domestic Markets and Monetary Management Department, accepted Rs320 billion offered by banks, including Rs300 billion in the seven-day tenor at 11.01% and Rs20 billion in the 14-day tenor at 11.06%.

Meanwhile, the conventional reverse-repo OMO saw banks submit more than Rs11.39 trillion, of which the SBP accepted Rs11.208 trillion. This included Rs208 billion for seven days at 11.05% and a sizeable Rs11 trillion for 14 days at 11.01%. Combined, the two operations injected over Rs11.5 trillion into the market as the central bank sought to ease liquidity pressures and ensure smooth short-term financing for both Islamic and conventional institutions.

The Pakistani rupee extended its mild upward trend against the US dollar on Friday, appreciating by 0.01% in the interbank market. By the end of trading, the currency closed at 280.72, improving by Rs0.04 compared to the previous day’s close of 280.76.

Meanwhile, gold prices in Pakistan declined sharply, tracking a significant fall in global markets where the precious metal dropped about 3% amid a broader risk-off sentiment. The global slide followed hawkish remarks from US Federal Reserve officials, which dampened expectations of a possible interest rate cut in December and triggered profit-taking among investors.

In the domestic bullion market, the price of gold per tola dropped by Rs3,300 to settle at Rs439,762, according to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA). The price of 10-gram gold also fell by Rs2,829, closing at Rs377,025.

The decline came a day after gold surged in the local market, when per-tola prices climbed Rs8,300 to Rs443,062 on Thursday amid strong international cues.

Adnan Agar, Director at Interactive Commodities, said the volatility reflected global uncertainty. “The market went up to $4,245 but came down again,” he said. “Today, it made a low of $4,030 and is currently trading near $4,075.”

“If the closing remains below $4,080, then it’s a bit negative for gold. It could fall back to the level of $3,990 and $3,950,” he explained. “But if the closing goes to the upside — above $4,100 — then there will be chances that gold can again move toward $4,250,” he said.