KARACHI, Jan 31: The State Bank on Tuesday sucked up over Rs16 billion, pushing the money market to tight corners and sending the overnight rate to the highest level.

The SBP conducted the open market operation (OMO) just a day before the treasury bills auction scheduled for Wednesday (today), leaving no option for easing up of money market rates.

The central bank picked up Rs16.2 billion while the market was in excess of about Rs8 billion which suddenly hit rates, and the overnight rate touched 8.9 per cent. The rate was 6.5 per cent a day earlier.

The SBP has set Rs13 billion as the auction target for treasury bills and an inflow of Rs13.5 billion is scheduled the same day.

Analysts said the SBP had picked up the amount for just two days and the outflow would come back into the market on the day of settlement of T-bills on Thursday.

As a part of tight monetary policy, the SBP does not allow easing up of money market rates and whenever rates start falling, it conducts the OMO to push it to the highest level of 8.9 per cent.