Islamabad: The Pakistani rupee showed a slight appreciation against the US dollar on Friday, closing at PKR 281.97 in the inter-bank market, up from PKR 282.06 the previous day. This marginal gain came amid the State Bank of Pakistan’s (SBP) historic liquidity injection into the banking system to support the government’s fiscal needs.
On Thursday, the SBP injected a record-breaking PKR 12.82 trillion into the banking sector through Open Market Operations (OMOs), marking one of the largest liquidity infusions in recent history. Of this total, PKR 12.42 trillion was provided via conventional reverse repo OMOs, including PKR 11.9 trillion through 21-day loans at an interest rate of 11.03% and PKR 521.1 billion through 7-day loans at 11.10%. An additional PKR 396 billion was injected using Shariah-compliant Mudarabah-based OMOs, catering to both conventional and Islamic banking sectors.
This massive liquidity injection is part of SBP’s strategy to indirectly finance the government’s fiscal deficit, as direct borrowing from the central bank is restricted by the International Monetary Fund (IMF). The central bank injects funds into commercial banks, which then invest in government treasury instruments, effectively bridging the government’s funding gap.
The fiscal strain is further exacerbated by a revenue shortfall at the Federal Board of Revenue (FBR), with actual collections at PKR 11.8 trillion compared to the FY2025 target of PKR 12.3 trillion. Meanwhile, SBP has already transferred PKR 2.5 trillion in profits to the Ministry of Finance as non-tax revenue during the first nine months of FY2025. The petroleum levy contributed PKR 833 billion over the same period.
In domestic markets, gold prices surged sharply in line with global trends driven by rising geopolitical tensions. The All-Pakistan Gems and Jewellers Sarafa Association (APGJSA) reported an increase of PKR 3,500 per tola, pushing the price to PKR 351,000. The 10-gram gold rate rose by PKR 3,000, reaching PKR 300,925.
Globally, gold prices rallied 2% on Friday, aiming for their best weekly performance in six weeks. Investor anxiety over renewed threats of US tariffs on European goods and warnings to Apple Inc. over its manufacturing decisions boosted safe-haven demand for gold.
“Gold is up today due to strong safe-haven demand,” said Adnan Agar, Director at Interactive Commodities. International gold prices hit a high of USD 3,364 per ounce during the trading session, hovering around USD 3,361 after opening at USD 3,300 and touching a low of USD 3,286 earlier.
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