KARACHI, July 2: The State Bank of Pakistan sold treasury bills worth Rs76.844 billion on Wednesday, leaving no option for surplus liquidity in the market.

At the same time, the SBP siphoned off more liquidity through open market operation (OMO) to keep the banks on a tight rope.

The SBP had announced to sell T-bills worth Rs80 billion and succeeded to sell Rs76.8 billion. However, most of the T-bills investment was made for three months only.

The SBP did not receive offers for benchmark 6-month T-bills which was an indication that banks were not in a mood to engage their money for a longer period. The central bank sold only Rs1.989 billion for 12-month T-bills.

The dealers believe that in the wake of rising trend of interest rate, banks were not ready to invest for longer periods as it can deprive them of higher income.

The government has announced to maintain 12 per cent inflation during the fiscal 2008-09 which means that the interest rate could go further higher.

The SBP conducted OMO and sucked up Rs64.1 billion from the market the same day.