SBP reports minor decline in foreign reserves during the week

KARACHI: Pakistan’s foreign exchange reserves saw a slight dip during the week ending October 24, with total liquid reserves falling by USD 165.9 million, according to data released by the State Bank of Pakistan (SBP).

The country’s total reserves now stand at USD 19.68 billion. Out of this, SBP’s reserves increased modestly by USD 16.4 million, while those held by commercial banks declined by USD 182.3 million, dragging the overall tally down.

SBP injects Rs11.78 trillion into money market

In a separate move aimed at ensuring liquidity in the banking system, the central bank conducted a large-scale Open Market Operation (OMO), injecting Rs11.78 trillion into the market. Of this, Rs11.5 trillion was provided through a conventional reverse repo OMO, while Rs277 billion was channelled through a Shariah-compliant Modarabah-based OMO.

An Open Market Operation is one of the key tools used by the SBP to manage liquidity in the financial system. When banks face a shortage of cash, the SBP provides funds through OMO injections against government securities such as Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs).

Conversely, it conducts OMO mop-ups to withdraw excess liquidity by selling these securities.

For Islamic banks, liquidity is managed through Shariah-compliant instruments such as Bai-Muajjal transactions, where GOP Ijara Sukuk serve as eligible collateral.

The recent injection reflects the central bank’s active stance in maintaining liquidity and stability in the financial markets amid changing monetary conditions. Analysts believe such measures are likely to help stabilise short-term money market rates and ensure smooth financial operations in the weeks ahead.