Mettis Global News
Mettis Global News
Mettis Global News AD
Mettis Global News AD

OMO Result: SBP receives no bids against quotes for 6-day tenor

OMO Result: SBP injects Rs1.77tr
Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp

March 21, 2023 (MLN): The State Bank of Pakistan (SBP) has received no bids against the invitation of the quotes for Open Market Operations (OMO) for the Reverse Repo Purchase (Injection) and Shariah Compliant Mudarabah-based OMO injection for 6-day contracts today.

The SBP had invited bids from banks and financial institutions for the OMO injections, which are aimed at managing liquidity in the interbank market. 

However, the lack of bids indicated that banks and financial institutions have sufficient liquidity in the market and do not require the injections at this time.

The central bank has been conducting OMO injections and withdrawals regularly to manage liquidity in the interbank market and to achieve its monetary policy objectives.

For the unversed, OMO is a tool used by a Central Bank (or monetary authority) to inject or mop-up funds, based on the liquidity requirements, from the banking system via the purchase or sale of eligible securities.

Operationally, in the case of OMO (Injections), SBP lends funds to banks/PDs against eligible collateral to address liquidity shortage in the system.

In OMO (Mop-up), SBP sells MTBs to banks against funds to remove surplus liquidity from the system.

SBP conducts four types of open market operations (OMOs) to manage the system’s liquidity:

  1. Injection – Reverse Repo: (To tackle short market positions)
  2. Mop-up – Repo (To tackle long market positions)
  3. Outright Sale or Purchase (long-term liquidity mgt)
  4. Bai-Muajjal (Islamic mode – Deferred Payment)

Copyright Mettis Link News

Posted on: 2023-03-21T13:42:56+05:00