KARACHI, Dec 12: The State Bank of Pakistan (SBP) on Monday mopped up another Rs12.05 billion through the Open Market Operation (OMO) but the maturity period was kept well calculated to make the market extra liquid at the time of next T-bills auction.

This was the fourth OMO after the previous T-bills auction when the SBP failed to pick up liquidity for 3 and 6 months and raised Rs19.7 billion for one year.

However, the rates for OMOs have been gradually coming down as the SBP picked up Rs12.05 billion at 7.85 per cent.

Analysts said the SBP has formulated a strategy to flood the market with excess liquidity at the next auction of T-bills. Already, an inflow of Rs41 billion is scheduled to join the money market before the T-bills auction, while anther Rs17 billion of OMO would be matured at the same time.

“Now the SBP managed to pick-up another Rs12.05 billion on Monday through OMO for 10 days, which means that at the time of next auction, the overall inflow would be around Rs70 billion,” said an analyst.

He was of the view that the SBP, which found itself stuck-up with piling up of T-bills on its desk, has now been able to produce ample liquidity for selling of T-bills in the next auction.

Banks, willing to get higher returns on T-bills, resisted offering their money at the prevailing rates but they were forced to rent the liquidity at significantly lower rates for OMO.

“The SBP accepted the money on Monday at 7.85 per cent, which indicates that the rates would prevail till the next auction of T-bills and the SBP will be succeeded to sell its papers at the desired rates of return,” said another analyst.

Most of the analysts believe that the SBP could continue to operate with tight monetary policy despite change of leadership at the Bank. They said the SBP would review the monetary policy by the end of first half of the current fiscal 2005-06, the time, when the new SBP governor would take the charge. In fact, the new governor would have no time to review the policy and it would continue, said the analyst.