KARACHI, Jan 13: The State Bank on Thursday injected Rs9.35 billion into the cash-strapped inter-bank money market to help banks overcome the liquidity shortage created due to withdrawals from rupee deposits ahead of Eidul Azha.

The central bank made this injection for one-week through reverse repo of treasury bills at 5.25 per cent, which means it will sell these bills again to the banks after a week and get Rs9.35 billion back.

Despite this injection, the banks had to borrow Rs2.6 billion more from the central bank through its discount window at 7.5 per cent, as the injection failed to satisfy their demand for cash. Banks have run short of cash due to withdrawals of cash ahead of Eidul Azha that falls on January 20.

RUPEE: The rupee gained eight paisa or more than 0.1 per cent value against the US dollar in the inter-bank market. Bankers said it closed at 59.50 a US dollar on Thursday, up from 59.58 on Wednesday.

They said that the rupee gained strength on increased inflow of remittances of foreign exchange from overseas Pakistanis. Expatriate Pakistanis send more money back home for the two holy festivals - Eidul Fitr and Eidul Azha - for increased spending here.

Those returning from abroad on these occasions also bring home more foreign exchange. In five months to November 2004, the country received $1.6 billion remittances from overseas Pakistanis and the amount is expected to rise to $4 billion at the end of the current fiscal year.