State Bank Pakistan Injects Rs869 Billion May 16

The State Bank of Pakistan injected a massive Rs869 billion into the banking system on Friday, May 16, 2025, through conventional reverse repo and Shariah-compliant modarabah-based Open Market Operations, a critical move to alleviate short-term liquidity constraints. The central bank allocated Rs578.65 billion via conventional reverse repo, with Rs223.65 billion accepted for a 7-day tenor at a cut-off rate of 11.08% and Rs355 billion for a 14-day tenor at 11.05%, per the published results.

Simultaneously, a Shariah-compliant Open Market Operation added Rs291 billion, including Rs145.2 billion for a 7-day tenor at 11.09% and Rs145.8 billion for a 14-day tenor at 11.10%, supporting the Islamic banking sector. The State Bank of Pakistan employs these operations to manage liquidity, injecting funds when tight or mopping up excess when flush, using Market Treasury Bills, Pakistan Investment Bonds, and Government of Pakistan Ijara Sukuk as collateral for conventional and Islamic transactions, respectively.

This liquidity boost occurs amid monetary tightening and cautious management, balancing inflation control with economic stability, with moderate borrowing costs reflecting current monetary policy. Web context indicates ongoing liquidity challenges, while posts found on X show mixed reactions—some see it as a stabilizing step, others question its sustainability. Critically, the narrative of “easing constraints” may mask underlying pressures—web sources highlight persistent inflation risks, and X sentiment suggests investor uncertainty, pointing to potential long-term concerns.