The State bank of Pakistan injected another PKR 105 bn in Pakistani banking system to ease the pressure due to liquidity shortage. The rate applied to commercial banks this time was 9.91%, whereas, last week around PKR 121.5 bn were provided at 9.85%.
At the end of last moth auction of treasury bills, helped SBP in raising Rs 541 bn for the three months T-bills. The auction was conducted as a counter measure to control increasing inflation in the country. However, the resultant cash outflow from the commercial banks created liquidity shortage and the banks paid the price as they discounted Rs 105 bn at 9.91%.
The Banks believed that due to prevailing high inflation in the country the policy rate would rise and they would get more return on their investment in government securities.