KARACHI, Aug 10: The State Bank on Tuesday sucked in part of the excess liquidity from the banking system by selling treasury bills under one-week and two-week repurchase agreement.
It also sold at least $10 million into the inter-bank market. The twin moves were aimed at stabilizing the fragile rupee that has been on the decline since the start of this fiscal year in July.
The central bank raised Rs3 billion for one-week and Rs175 million for two weeks through repo sale of TBs - both at 1.25 per cent. The SBP sold treasury bills at an open market operation or OMO called for this purpose.
Senior bankers said the market was surplus by Rs7-8 billion even after the outflow of Rs3.75 billion from the system adding that overnight call rate also closed at 0.25 per cent.
The OMO had generated a total demand of Rs6.425 billion for TBs. Out of this the SBP accepted only Rs3.75 billion and rejected the rest primarily because the rate of return demanded by the banks were higher than what the central bank wanted to offer.
Bankers said the SBP also sold at least $10 million into the inter-bank market to contain the rise of the dollar. They said the central bank sold the dollars through a large local bank but did not name it.
Bankers said that the dollar closed at 58.91 on Tuesday up from 58.90 on Monday as a result of the $10 million injection coupled with mopping up of excess liquidity.
But they said that the US unit did trade around Rs58.95 during off closing hours. The rupee has lost around 80 paisa or 1.4 per cent value against the dollar so far during this fiscal year - between July 1 and August 10.
