February 11, 2006	Saturday	Muharram 12, 1427

KARACHI, Feb 10: The State Bank on Friday injected another huge amount of liquidity which was second in this week but the response of the ‘dry market’ was unchanged as the overnight rate remained at the highest level of 8.9 per cent.

The SBP injected Rs21.2 billion into the market, but the liquidity position was tight enough to keep the money rates high. Despite this big injection, banks had to approach the SBP discount window to borrow Rs5.227 billion.

Before closure of the market for two days, the SBP had injected Rs13.650 billion on Tuesday, but the thirst for liquidity grew further reflecting from the continuous high overnight rates during the week.

Primary dealers had already indicated that the market would remain dry for at least two weeks despite time-to- time injection of liquidity by the SBP as there were no scheduled inflows in the coming days.

Liquidity management through OMO (open market operation) has become a regular feature to closely manage and monitor the tight monetary policy being followed by the SBP. Analysts see higher monetary assets growth as a threat to this policy and suggest more measures to check the growth that could also increase inflation.