KARACHI, Sept 22: The State Bank on Monday mopped up Rs22.5 billion from an excessively liquid banking system drying it up before the grand auction of Rs25 billion Pakistan Investment Bonds due next month.

Bankers said the SBP conducted an open market operation and mopped up Rs20.2 billion through one-week repo of treasury bills at 0.90 per cent and Rs2.3 billion through two-week repo at one per cent.

They said the market was excessively liquid with an inflow of Rs16 billion through maturity of last week OMO and other surplus funds worth about Rs9 billion available in the banking system.

Thus Monday’s OMO not only offset the impact of Rs16 billion inflow but also lifted extra liquidity from the system preparing it for the PIBs auction next month. The central bank would sell Rs25 billion long-term bonds on October 4. Bankers said after the OMO overnight call rates shot up to 3 per cent from one per cent in the morning but finally settled around 1.5 per cent.