SBP injects over Rs4.6tr via OMOs

Gold falls Rs3,800 per tola as global prices drop 2%

KARACHI:

The State Bank of Pakistan (SBP) on Monday injected more than Rs4.6 trillion into the banking system through conventional and Shariah-compliant open market operations (OMOs).

The central bank conducted reverse repo purchase operations with tenors of two and four days, accepting a total of Rs4.388 trillion against offers of Rs4.865 trillion. The injection was aimed at addressing tight liquidity conditions in the inter-bank market.

Under the conventional OMOs, the SBP accepted Rs138 billion for a two-day tenor at a rate of 11.55%, while for the four-day tenor it accepted Rs4.25 trillion at 11.53%. The bulk of liquidity support came through the four-day tenor, reflecting banks' higher demand for slightly longer-duration funds.

The total realised value of accepted bids stood at Rs4.228 trillion. Notably, the central bank accepted bids on a pro rata basis at the cut-off rate of 11.53%, indicating oversubscription at that level and strong demand from market participants. In parallel, the SBP conducted a Mudarabah-based Shariah-compliant OMO, injecting Rs240 billion for a four-day tenor. The accepted rate stood at 11.59%, slightly higher than the conventional operation, reflecting pricing dynamics in Islamic liquidity instruments.

The total amount offered in this segment was Rs338.5 billion, with partial acceptance again on a pro rata basis due to excess demand at the cut-off rate. Market analysts note that such large-scale injections are indicative of persistent liquidity pressures, driven by government borrowing requirements.

The Pakistani rupee inched up by Rs0.01 to close at 278.76 against the US dollar in the inter-bank market on Monday, compared to 278.77 in the previous session. Meanwhile, gold prices in Pakistan fell sharply, tracking losses in the international market, where bullion slipped nearly 2% amid a stronger dollar and evolving geopolitical tensions.

In the local market, the price of gold per tola declined by Rs3,800 to Rs479,962, according to the All-Pakistan Gems and Jewellers Sarafa Association. Similarly, the 10-gram gold dropped by Rs3,257 to Rs411,490, reflecting a broader bearish trend. Silver prices also decreased by Rs100 to Rs7,914 per tola.

Globally, spot gold fell 1.9% to $4,526.88 per ounce, while US futures declined 2.3% to $4,537.90, indicating sustained selling pressure in the bullion market.

Commenting on the trend, Interactive Commodities Director Adnan Agar said the market was standing at a lower level, with prices fluctuating between a high of $4,640 and a low of $4,524. They were later hovering near $4,540.

He noted that recent tensions involving Iran, including reports of attacks on ships, added to uncertainty. Although the United States has denied that it was their ship, the situation points to a potential low-scale conflict, which has paradoxically pressured gold as rising oil prices strengthen the dollar.

Looking ahead, Agar highlighted strong technical support for gold in the $4,400-4,440 range, suggesting it was unlikely to fall below that level and might witness a reversal.