KARACHI, Jan 27: After a long period inter-bank money market witnessed significant decline in overnight rate which slipped to 5 per cent despite regular mopping up of liquidity by the State Bank.

The SBP which justifies the higher overnight rates as part of its tight monetary policy mopped up Rs5.350 billion on Friday for just one day.

The SBP had picked up Rs10.300 billion on Thursday. Market analysts said the outflow through OMOs did not affect the rate. However, they maintained, that the short-term low rate would prove short-lived.

“Since the SBP wants to keep the market tight, the overnight rate would again move up. The inflows are also insignificant next month,” said an analyst.