KARACHI, April 16: The State Bank on Friday mopped up Rs18.5 billion from a fairly liquid inter-bank market through two-week repo of treasury bills at 1.14 per cent.

The open market operation conducted for this purpose attracted total bids worth Rs20.9 billion of which the SBP accepted Rs18.5 billion and rejected the rest. The central bank had also invited bids for four-week repo of treasury bills but it did not receive any.

Senior bankers said the State Bank mopped up excess liquidity from the system to keep it at desirable levels and ward off inflationary pressures. Consumer inflation or inflation measured by consumer price index rose 3.7 per cent year-on-year in nine months to March 2004 against the full fiscal year against the initial target of 3.9 per cent.

Bankers said the banks that bought the major chunk of Rs18.5 billion for two weeks included (i) National Bank (ii) United Bank (iii) Muslim Commercial Bank (iv) Allied Bank and (v) Citibank.

They said that there was not much liquidity left in the system after the OMO but overnight call rate still closed at 0.5 per cent. They said the rate should rise in the days to come after the settlement of the OMO.