The State Bank of Pakistan injected about Rs17.3 billion into the inter-bank market on May 27. This brought to an end, the liquidity crisis that had hit the market on May 16 and continued for some days. Banks had to make an average daily overnight borrowing of Rs13 billion from the State Bank discount window during this period.

The State Bank on May 27, pumped in Rs14.7 billion and Rs2.6 billion through one-week and two-week reverse repo of the Treasury bills, respectively at an open market operation. The central bank bought one-week T-bills at 6.50 per cent and two- week bills at 6.55 per cent.

In the T-bill auction on May 29, the National Bank was the only primary dealer to buy three-month T-bills from the central bank. The SBP sold Rs8.1 billion bills to the NBP at a maximum yield of 5.81 per cent and siphoned off Rs7.99 billion.

According to the Statement of Affairs of the State Bank of Pakistan, for the week ended May 18,2002, both notes in circulation and those issued declined after having risen in the past few weeks. Notes in circulation stood at Rs464,648.690 million against earlier week’s figure of Rs464,809.985 million, showing a fall of Rs161.295 million. When compared to the corresponding week a year ago when it was Rs403,666.991 million, the current week’s figure is higher by Rs60,981.699 million.

Total notes issued also recorded a decrease in the current week. At Rs464,834.223 million it was smaller by Rs107.816 million over the figure of Rs464,942.039 million recorded a week earlier. In the corresponding week last year it amounted to Rs403,797.129 million, which shows current week’s figure to be higher by Rs61,037.094 million over last year’s figure.

The approved foreign exchange including balances held outside Pakistan stood at Rs215,139.972 million, larger by Rs1,347.708 million over preceding week’s figure of Rs213,792.264 million recorded a week earlier. When compared to the corresponding week a year ago, when the figure was Rs58,266.029 million, the current week’s figure was higher by Rs156,873.943 million.

Balances held outside Pakistan in approved foreign exchange, which had declined in the past few weeks rose in the week under review. It stood at Rs26,780.527 million over the preceding week’s figure of Rs24,016.402 million, showing a rise of Rs2,764.125 million. Compared to last year’s corresponding figure of Rs20,412.908 million, the current week’s figure is substantially larger by Rs6,367.619 million. Loans and advances of scheduled banks to the three sectors agricultural, industrial and export show a mixed picture in the week under review. The agricultural sector received Rs53,837.695 million, against preceding week’s figure of Rs53,855.313 million, showing a fall of Rs17.618 million. The current week’s figure is lower by Rs708.665 million over last year’s corresponding figure of Rs54,546.360 million.

There was an inflow of Rs3,587.848 million to the industrial sector during the week under review, depicting a decline of Rs27.044 million over previous week’s Rs3,614.892 million. When compared to last year’s corresponding figure of Rs4,368.764 million, the current week’s figure is lower by Rs780.916 million.

The export sector received Rs57,814.444 million over previous week’s figure of Rs57,238.006 million, showing a rise of Rs576.438 million. Current week’s figure was lower by Rs18,010.364 million over last year’s corresponding figure of Rs75,824.808 million.

According to the weekly Statement of Position of scheduled banks for the week ended May 18,2002, the sum of demand and time liabilities maintained the upward trend in the week under review, as demand deposits recorded an increase. The sum total stood at Rs1,420,750 million against preceding week’s Rs1,416,637 million, showing a rise of Rs4,113 million. As compared to the total deposits of Rs1,234,291 million in the corresponding period last year, the current week’s deposits were higher by Rs186,459 million.

During the week under review, demand deposits rose to Rs632,692 million, or by Rs5,526 million over previous week’s Rs627,166 million, and was also higher against last year’s corresponding figure of Rs530,137 million by Rs102,555 million.

Scheduled banks borrowings from the State Bank of Pakistan against promissory notes and other approved securities rose in the current week, as against a fall witnessed earlier. At Rs133,833 million it was larger by Rs1,075 million over preceding week’s Rs132,758 million. Compared to last year’s corresponding figure of Rs140,239 million, the current week’s figure is lower by Rs6,406 million.

Scheduled banks borrowings from banks abroad stood at Rs13,433 million in the current week, as against Rs13,251 million a week ago, showing a rise of Rs182 million. It was lower by Rs1,231 million over last year’s corresponding figure of Rs14,664 million.

Money at call and short notice in Pakistan showed a rise in the week under review. It stood at Rs38,047 million, showing a rise of Rs1,938 million over preceding week’s Rs36,109 million.