The central bank Friday pumped Rs327.150 billion into the local money market, which the analysts believe, is faced with a severe liquidity crunch. The State Bank of Pakistan (SBP) is frequently injecting liquidity into the banking system as only a week ago on October 4 the regulator pumped Rs40 billion into the rupee-starved currency market. Further, the central bank during last 20 days has lent over Rs520 billion to the banks.
Fridays of the weeks preceding this had seen the regulator, respectively, injecting liquidity worth Rs267 billion and Rs254.25 billion into the rupee-scarce banking system. Last Tuesday (October 4) was another day of money injection when the SBP, through its reverse repo open market operations in the Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs) of 3-day maturity, had injected Rs40 billion at 13.35 per cent annual rate of return. Friday too saw the central bank injecting a huge sum of Rs327.150 billion, into the currency market at 11.66 per cent annual rate of return after the policy-setters at SBP cut the discount rate by 150bps to the pre-2008 12 per cent.
