KARACHI, May 13: Pakistani banks borrowed heavily from the central bank on Friday to meet their cash reserves requirement ahead of the weekend as the money market remained short of funds, dealers said. Banks borrowed Rs33 billion from the State Bank of Pakistan’s discount window at nine per cent. On Thursday, they borrowed Rs9.183bn from the facility.

The banks have to keep a minimum of five per cent of their cash reserves with the central bank over the weekend.

“There is no major inflow of funds next week, which means the market will remain tight,” said a brokerage house dealer. Dealers said the central bank was intentionally keeping the market short of funds as part of its tight monetary policy to check inflation.

Official figures show the consumer price index rose 10.25pc in the year through March, the highest rate since 1997, forcing the central bank to increase its key discount rate last month to nine per cent from 7.5pc previously. This was followed by a sharp rise in yields in consecutive Treasury bill auctions.—Reuters