SBP injects Rs13.5tr into banking system to ease liquidity strain

ISLAMABAD: The State Bank of Pakistan injected a record Rs13.5 trillion into the financial system on Friday, seeking to address liquidity pressures in the banking sector through a mix of conventional and Islamic open market operations. 

Data released by the central bank showed that Rs12.8 trillion was provided via a seven-day reverse repo agreement, while another Rs453 billion was injected through a 14-day tenor. In a separate Shariah-compliant operation, the SBP supplied Rs411 billion to Islamic banks through a modaraba-based OMO. 

The massive liquidity injection underscores the banking sector’s growing dependence on central bank funding, as government borrowing needs persist under the IMF’s fiscal framework. Analysts say the scale of the injection highlights tight cash conditions in the system, driven by high domestic borrowing and reduced private sector credit demand. 

The rupee, meanwhile, weakened slightly in the interbank market, falling 0.10 per cent to close at Rs282.96 against the US dollar. The local currency had ended Thursday at Rs282.67. 

The dip came amid heightened geopolitical uncertainty, as global investors moved towards safe-haven assets following reported Israeli airstrikes on Iran. The dollar gained against major currencies, with the Japanese yen and Swiss franc also strengthening. 

Domestic gold prices surged in response to the broader global shift toward risk aversion. The price of gold per tola in Pakistan rose by Rs4,600 to reach Rs361,500, tracking gains in the international market where the metal rallied on renewed Middle East tensions.

The SBP’s liquidity operation and market movements come just weeks ahead of Pakistan’s annual budget and as authorities prepare for talks on a new IMF programme, which is expected to include further fiscal and monetary reforms. 

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