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Express Tribune
02-08-2025
- Business
- Express Tribune
SBP pumps Rs13.3tr, raises Rs358b
Listen to article The State Bank of Pakistan (SBP) injected a record Rs13.33 trillion into the financial system on Friday through two major Open Market Operations (OMOs), signalling its continued effort to manage liquidity and stabilise financial markets. The injection was made through both conventional reverse repo purchases and Shariah-compliant Mudarabah-based instruments. Under the conventional OMO, the SBP injected Rs13.05 trillion, comprising Rs904.25 billion for a 7-day tenor at 11.02% and Rs12.15 trillion for a 14-day tenor at 11.01%. Bids were accepted on a pro-rata basis. The high participation, with total bids at Rs13.31 trillion, reflected strong demand from market participants. In the parallel Shariah-compliant OMO, the central bank injected Rs270 billion. This included Rs120 billion for 7 days at 11.15% and Rs150 billion for 14 days at 11.13%. The higher rates on Islamic OMOs indicated continued premium demand for Shariah-compliant liquidity. Additionally, the SBP raised Rs358 billion in the latest Pakistan Investment Bonds (PIB) auction, exceeding the Rs300 billion target. Investor interest remained strong, with total bids reaching Rs1,129 billion. According to AKD Securities, cut-off yields for shorter tenors increased. The 2-year bond yield rose by 24 basis points to 11.09%, the 3-year by 9bps to 11.14%, and the 5-year by 5bps to 11.44%. In contrast, the 10-year paper yield fell by 5bps to 12.15%. The 15-year bond was accepted at a cut-off yield of 12.45%, the first such result disclosed for this tenor. The rise in shorter-term yields reflected market concerns over near-term inflation and tight liquidity. Meanwhile, the decline in longer-term yields suggested investor confidence in long-term economic stability. The aggressive bidding highlighted strong investor appetite for government securities amid a stable interest rate outlook. The Pakistani rupee also appreciated by 0.05% on Friday. It closed at 282.72 against the US dollar, gaining 15 paisa from the previous day's rate of 282.87. In contrast to global trends, gold prices in Pakistan edged lower on Friday. This came despite bullion gaining nearly 2% internationally, driven by weaker US payroll data and renewed trade tensions that increased safe-haven demand. According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the gold price per tola dropped by Rs100 to settle at Rs352,900. The price for 10 grams also fell by Rs86, closing at Rs302,555. This modest drop followed Thursday's steeper Rs2,000 per tola decline, reflecting currency movements and local demand pressure. Internationally, spot gold surged 1.8% to $3,350.67 per ounce as of (15:35 GMT), after rising as much as 2% earlier. The metal was up 0.4% for the week. Adnan Agar, Director at Interactive Commodities Gold, said gold touched an intraday low of $3,381 and a high of $3,455, trading near $3,448. He added that weak US data and tariff concerns linked to President Donald Trump drove the $60 spike. He expected bullish momentum to continue into Monday, with resistance near $3,460–$3,470.
Express Tribune
18-07-2025
- Business
- Express Tribune
FX dips to $19.96b despite SBP's uptick
Listen to article Pakistan's total liquid foreign exchange reserves stood at $19.96 billion as of July 11, 2025, marking a marginal decline of $71.6 million over the previous week, according to data released by the State Bank of Pakistan (SBP) on Thursday. The reserves held by the SBP rose by $23 million, reaching $14.53 billion, compared to $14.50 billion recorded a week earlier. This reflects the second consecutive weekly increase in central bank reserves. However, commercial banks saw a notable dip in their net foreign holdings, which fell by $95 million to $5.43 billion. The current foreign reserves provide Pakistan with over three months of import cover. Out of the SBP's total foreign exchange holdings of $14.5 billion, approximately $9.4 billion comprises deposits from friendly countries. In June 2025, China rolled over $3.4 billion in commercial loans, with $2.1 billion deposited directly with the SBP. Saudi Arabia and the UAE have provided up to $2 billion and $1 billion, respectively, while Qatar has contributed around $3 billion through deposits and direct investments. Moreover, the central bank conducted two separate Open Market Operations (OMOs) on Thursday to inject a liquidity of Rs902.5 billion into the banking system - one under the Shariah-compliant Mudarabah-based framework and the other through a conventional reverse repo arrangement. Both operations were conducted with an eight-day tenor. In the Shariah-compliant OMO, the central bank accepted all three submitted quotes within a narrow rate band of 11.13% to 11.15% per annum. The total injection was Rs37.39 billion (realised value) against a face value of Rs37 billion, with the rate of return fixed at 11.13%. Simultaneously, the SBP carried out a conventional reverse repo OMO, receiving 13 quotes, of which 11 were accepted. The accepted bids amounted to a face value of Rs883.2 billion, with a realised value of Rs865.13 billion. The rate of return was 11.08% per annum. In the latest Pakistan Investment Bonds' (PIBs) auction held on July 16, the government raised Rs311.82 billion, surpassing its target of Rs300 billion, mainly through five-year bonds. Cut-off yields dropped significantly across all tenors by 19 to 54 basis points compared to June, which reflected strong market confidence and expectations of policy rate cut amid easing inflation and improving macroeconomic indicators. Notably, the two-year and five-year bonds saw the steepest decline in yields, while the 15-year bond got no bids. "The sharp decline in yields signals growing market anticipation of a policy rate cut in the upcoming monetary policy, likely driven by easing inflation and improved macro indicators," noted Ali Najib, Deputy Head of Trading at Arif Habib Limited. The Pakistani rupee remained stable against the US dollar on Thursday, closing at 284.97, down by just one paisa from 284.96 a day earlier. Meanwhile, gold prices in Pakistan continued to slide, mirroring a downturn in the international market, where bullion extended losses following robust US economic data. The data bolstered expectations that the Federal Reserve would remain cautious in resuming monetary easing this year, putting pressure on safe-haven assets like gold. According to the All Pakistan Sarafa Gems and Jewellers Association, the price of gold dropped by Rs900 per tola, settling at Rs355,100. Interactive Commodities Director Adnan Agar noted, "After dipping slightly, the market has rebounded somewhat. The $3,300 level is acting as a strong support," he said. "If prices fall below that, we could see a bearish trend. However, if this level holds, resistance lies ahead at $3,350, then $3,380 and eventually at $3,400."
Express Tribune
21-06-2025
- Business
- Express Tribune
SBP injects Rs14tr to bridge gaps
Listen to article The State Bank of Pakistan (SBP) conducted one of the highest Open Market Operations (OMOs) on June 20, 2025, injecting liquidity worth a substantial Rs14.3 trillion into the banking system to meet temporary and structural liquidity requirements. According to official data, the SBP accepted Rs13.93 trillion through a conventional reverse repo (injection) at a rate of return of 11.03% per annum across 36 quotes. Additionally, a Shariah-compliant Mudarabah-based OMO injection of Rs375 billion was executed at a return of 11.11% per annum with three accepted quotes. Sana Tawfiq, Head of Research at Arif Habib Limited termed this "among the highest single-day OMOs by the central bank," attributing the surge to both temporary and permanent factors. She noted that currency in circulation typically rises ahead of Eid, creating a temporary liquidity gap. On the structural side, debt repayments and a time lag between repayments and fresh inflows are elevating liquidity needs, she explained. She added that the government's fiscal deficit financing — constrained by International Monetary Fund (IMF) conditions that bar direct borrowing from the SBP — has further amplified OMO reliance, with banks channelling funds into government securities instead. Market experts expect the liquidity injections to remain elevated in the near term until inflows match outflows and post-Eid cash demand normalises. Furthermore, the Pakistani rupee extended the declining trend against the US dollar in the interbank market on Friday, slipping by 0.02%. By the close of trading, the local currency settled at 283.70 against the greenback, down by six paisas from the previous day's closing rate of 283.64. Globally, the US dollar was on track for its largest weekly gain in over a month, supported by safe-haven demand as investors remained cautious over escalating tensions in the Middle East and their potential impact on the global economy. Meanwhile, gold prices in Pakistan fell on Friday in line with the international market, which remained steady but on track for a weekly loss as investors awaited clarity on the Israel-Iran conflict after US President Donald Trump delayed a decision on possible involvement. According to data released by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of 24-karat gold per tola dropped by Rs1,595 to settle at Rs357,000. Similarly, the rate for 10 grams of gold declined by Rs1,368 to Rs306,069. Internationally, gold prices were steady on Friday and poised for a weekly loss after President Trump delayed a decision on entering the Israel-Iran conflict, according to Reuters. Spot gold was little changed at $3,369.63 an ounce, as of 1557 GMT. Adnan Agar, Director of Interactive Commodities said gold prices remained range-bound on Friday, with the metal trading between $3,340 and $3,375 in the international market, as investors awaited clarity on geopolitical developments in the Middle East. He told The Express Tribune that the market has been on a downward trend for the past five trading sessions, with a key support level identified at $3,320.
