07/10/2008
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SBP injects 91pc more funds in Sept
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Muhammad Ali Qaisar
KARACHI: State Bank of Pakistan (SBP) has injected liquidity of around Rs150 billion in the banking system during the month of September 2008 that was 91 per cent higher as compare to the total amount poured in during the month of August 2008.
According to the data provided by the money market sources the country's central bank has pumped an amount of Rs149.43 billion during 25 days of September, 2008 (from Sept 05 to 30) in order to generate excess liquidity for the already troubled banking industry that had been under tremendous pressure on account of Ramadan withdrawals. However, the data revealed that the amount injected in the money market by SBP during September was 91 per cent higher than that of August where total injections amounted to be Rs78.2 billion.
On September 05, the SBP injected about Rs22.37 billion through the sale of government securities (MTBs & PIBs), on September 08 it provided Rs13.36 billion. From September 13 to 23 once again keeping its expansionary policy stance up it inserted a total amount of Rs68.32 billion and then ejected Rs1.5 billion as on September 25. During the last three days of the month under review (September 27 to 30) SBP released a huge amount in the system that stood at Rs70.38 billion. It should be noted that the amount issued in last three days of September by SBP was done in just two sessions of its operations.
Traditionally Eid season witnesses huge outflow of liquidity from the banking system, but soon it recovers after the Eid as the market deposits back what it earns during the season. It is to be noted that according to the conservative estimates about a million shops and 600 markets all over the country earned around Rs70 billion on account of Eid season.
Analysts said during Ramadan foreign exchange inflows go high as overseas Pakistanis send money back to their families. Also, huge charities including Zakat are also remitted to Pakistan by the overseas Pakistanis. These inflows also generate excess liquidity but the SBP formally does not allow the market to approach these inflows in order to maintain the market equilibrium and keep inflation in control.
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