June 23, 2007	Saturday	Jamadi-us-Sani 07, 1428

KARACHI, June 22: The State Bank on Friday sold treasury bills worth Rs12 billion to absorb liquidity from the market. The SBP conducted Open Market Operation (OMO) to sell Rs9 billion T-bills for 13 days and Rs3 billion outright sale was made for 42 days.

Money dealers said the SBP would come more frequently in the coming days as liquidity was expected to remain high.

Excess liquidity is the direct impact of high foreign exchange inflows which pushed up the reserve money and very spending being made by the government.

The State Bank earlier said that the record subsidised loan to textile sector was another important factor for creating monetary growth problem.

The monetary growth rate (over 16 per cent) went far beyond the annual target while the year is yet to end.

The SBP has the only and relatively effective tool of OMO to keep a control over the monetary growth and high supply of liquidity.