SBP injects Rs11.6tr into banking system

Gold climbs Rs2,000 to Rs461,936/tola as global rebound gathers steam

KARACHI:

The State Bank of Pakistan (SBP) injected approximately Rs11.6 trillion into the banking system on Monday through a reverse repo auction conducted as part of its Open Market Operations.

According to data compiled by AKD Securities from the SBP's figures, the central bank received total offers of Rs11,777 billion and accepted Rs11,613 billion across two tenors. In the four-day tenor, banks offered Rs31 billion, all of which was accepted at a rate of 11.54% after quotes ranged between 11.56% and 11.54%.

For the 14-day tenor, offers totalled Rs11,746 billion, of which Rs11,583 billion was accepted at the cut-off rate of 11.51%. The bid range stood between 11.57% and 11.51%. Of the amount tendered specifically at 11.51% (Rs5,652.7 billion), the SBP accepted Rs5,484.15 billion on a pro rata basis.

Furthermore, the Pakistani rupee edged higher against the US dollar on Monday, appreciating 0.01%. The local currency closed at 277.62, up three paisa from the previous level. On Thursday, the rupee had settled at 277.65 against the greenback.

The US dollar index, which tracks the greenback's performance against a basket of six major currencies, fell 0.1% and traded near its lowest levels of the month at 99.519.

Meanwhile, gold prices in Pakistan increased in line with gains in the international market, as the metal's 9% rebound in August to around $4,400 an ounce signalled that bullion was starting to regain favour with institutional investors and central banks.

In the local market, the price of gold per tola reached Rs461,936 after a gain of Rs2,000 during the day. Ten-gram gold was sold at Rs396,035, up Rs1,715, according to rates shared by the All-Pakistan Gems and Jewellers Sarafa Association.

The scale of the August recovery has taken gold above two technical resistance levels. Market participants said the rebound left bullion better placed to extend gains as it moved beyond the initial shock of the US-Israel war with Iran.

The outbreak of the conflict in late February had driven gold from a record high of $5,595 per ounce in January to below $4,000 in June. Investors sought liquidity while some central banks tapped reserves to support domestic economies amid an oil price rally.

An HSBC analyst said the magnitude of the rebound pointed to renewed central bank buying. Institutional investors are also seen rebuilding holdings of large bars after the earlier sell-off. Further upside will depend on oil prices and developments around Iran. Meanwhile, silver prices in the local market rose by Rs80 to Rs7,029 per tola.