KARACHI, Oct 7: The State Bank on Thursday siphoned off Rs10.15 billion from the inter-bank market through one week repo of treasury bills at 2 per cent at an open market operation held for this purpose.

This was the second such liquidity draining within this week. On Monday, the central bank had mopped up Rs12.5 billion from the inter-bank market for upto two weeks, also at 2 per cent.

The State Bank is trying to keep the rupee liquidity tight to save the local currency from falling too fast. The rupee has lost 15 paisa against the US dollar so far during this month.

Bankers said despite the mopping up of Rs10.15 billion on Thursday the market was surplus by Rs5-10 billion. But they said that it pushed up overnight call rates from 0.25 to 0.5 per cent. The market may have little surplus left on Friday when banks are supposed to average out their cash reserves requirements.

Banks are required to show five per cent cash reserves every Friday though they are allowed to let this fall to 4 per cent on any other working days. This leads to averaging of reserves on Fridays which means drainage of liquidity from the banking system if banks have been maintaining a lower-than-five per cent reserves during last week.