29 October 2004	Friday	14 Ramazan 1425

KARACHI, Oct 28: The State Bank, on Thursday, sucked in Rs25.95 billion from an extremely liquid inter-bank market. The central bank mopped up Rs11.45 billion through one-week repo of treasury bills and Rs14.5 billion through two-week repo at 2 per cent and 2.45 per cent respectively.

The open market operation conducted for siphoning off extra liquidity had generated Rs29.7 billion treasury bills, Rs13.2 billion in one-week repo and Rs16.5bn in two-week repo.

The market was flooded with liquidity due to a huge inflow of Rs85 billion through maturity of previously sold T-bills. Part of this liquidity was offset due to settlement of Wednesday's auction of T-bills in which the SBP had sold Rs20.35 billion three-month and one-year bills and a scheduled outflow of Rs14 billion on Wednesday. The OMO conducted on Thursday further offset the impact of Rs85 billion inflows.

But senior bankers said that the market was still surplus by an estimated Rs15 billion with overnight call rates ranging between 0.25-0.5 per cent most of the time during the day.

This much liquidity in the system should help the banks finance pre-Eid withdrawals from their deposit bases.