State Bank to buy govt paper in reverse repo

Published Aug 07, 2012 08:04am

The State Bank of Pakistan — File Photo
The State Bank of Pakistan — File Photo

KARACHI: Pakistan's central bank said it would buy government paper from commercial banks on Tuesday in a three-day reverse repo to inject funds into the money market.

The State Bank of Pakistan did not say how much money it would inject through the open market operation.

The result of the auction will be announced at 10:45 am (0545 GMT) and settlement will be later in the day.


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Comments (3) Closed




Arsalan
Aug 07, 2012 10:31am
would you mind the reason behind your view ?
afzaal
Aug 07, 2012 08:28am
in my view it will not be better for us that the central bank purchased the govt papers
@AsifAmeer_AP
Aug 08, 2012 01:49pm
Afzaal is right. Here's why SBP buying Govt paper is bad. 1. Its the same as printing new money to prop of Govt debt. 2. It puts pressure on the Rupee in the forex market. 3. It encourages the Govt to borrow more by keeping interest rates artificially low. To learn more, google up "Pakistan's Looming Currency Crisis" in TheNew's blog section