December 24, 2021 (MLN): The State Bank of Pakistan (SBP) conducted another Open Market Operations (OMO) today, in which it injected Rs701 billion and Rs381.75 billion into the market for 7 days and 63 days at 9.82% and 9.85%, respectively, bringing total injections to Rs1.08 trillion.
To recall, in the last OMO, SBP injected SBP injected Rs1.08 trillion at 9.82% for seven days and Rs689bn at 9.9% for 63 days, providing the money market with total funds of Rs1.77 trillion.
Generally, OMOs are conducted for shorter tenors, however, this unusual movement of funds injection through liquid assets for a tenor of more than two months indicates that SBP wants to curb the unnecessary hike in secondary market yields and to signal that benchmark interest rate would remain stable in January’s monetary policy.
The last OMO injection helped curb the yields of T-bills and PIBs both in the primary and secondary markets as they have cumulatively dropped by 22-65 bps on 3M to 10-year bonds.