KARACHI, Jan 3: The State Bank of Pakistan on Tuesday mopped up Rs10.7 billion through an Open Market Operation (OMO). The central bank said that it had picked up Rs10.7 billion out of the total offers of Rs11.9 billion. This outflow created liquidity problem pushing up the overnight rate from 4.5 per cent on Saturday to 8.5 per cent at the close of market on Tuesday.

Analysts said that it was difficult to understand why the OMO was conducted just one day before the Treasury Bills auction. The SBP is scheduled to raise Rs45 billion through the auction on Wednesday.

They said that the money was picked up for only two days and at the time of auction settlement on Thursday, the OMO would be mature, and thus more liquidity would be in market.

The SBP picked up the money at a rate of 6.5pc much lower than the market expectation.