SBP pumps Rs10.7tr into money market

The State Bank of Pakistan (SBP) on Friday injected more than Rs10.7 trillion into the money market through conventional and Shariah-compliant open market operations (OMOs).

According to SBP data, the central bank conducted a major reverse repo (conventional OMO) injection of Rs10.568 trillion at rates ranging between 11.01% and 11.02%. Banks had offered bids worth Rs10.851 trillion, of which the SBP accepted Rs368 billion for seven-day tenor at 11.02% and Rs10.2 trillion for 14-day tenor at 11.01%, including pro rata acceptance on heavily subscribed quotes.

Separately, the SBP carried out a Shariah-compliant Mudarabah-based OMO injection of Rs212 billion against total offers of Rs243 billion. The central bank accepted Rs200 billion for seven days at 11.04% and Rs12 billion for 14 days at 11.06%, with partial pro rata acceptance on the lower seven-day rate.

The sizeable injections, particularly the large 14-day participation, indicate continued demand from banks for liquidity cover amid elevated government borrowing requirements.

Furthermore, the Pakistani rupee inched up against the US dollar on Friday, posting a marginal 0.01% gain in the inter-bank market. By the day's close, the currency stood at 280.52, improving by three paisa from Thursday's closing rate of 280.55.

In global trade, the US dollar was poised for its weakest week since late July, as investors raised expectations of additional monetary easing by the US Federal Reserve next month. Trading volumes were also lighter due to the Thanksgiving holiday in the United States.

Gold prices in Pakistan held steady for the second straight day on Friday, with the per-tola rate unchanged at Rs438,862 despite a surge in global bullion markets, where prices hovered near a one-week high on expectations of a Federal Reserve rate cut next month.

According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of 10-gram gold also remained unchanged at Rs376,253. Silver prices were flat as well, trading at Rs5,642 per tola.

The stability in domestic bullion rates comes even as international gold continued its upward momentum, supported by weakening US economic indicators and increasing bets on monetary easing. Reuters reported that spot gold rose 0.8% to $4,162.99 per ounce at 1:55 pm ET (1855 GMT), after hitting its highest level since November 14 earlier in the session. US gold futures for December delivery settled 0.6% higher at $4,165.20 per ounce.

Adnan Agar, Director at Interactive Commodities, said the market has clearly broken past a strong resistance level, signalling bullish momentum. "Gold prices are on the upside. It has broken a strong resistance and made a high of $4,207. The market was around $4,199, with a low of $4,150. As I mentioned earlier, the chances of more upside remain strong," he noted.

Agar added that upcoming US economic data scheduled for next week will likely guide the next major move, but until then, gold is expected to trade between $4,200 and $4,300. Analysts say the broader outlook remains supportive for bullion, as easing expectations and softer yields continue to make non-yielding assets like gold attractive to investors.