November 24, 2003	Monday	Ramazan 28, 1424

The money market is currently facing shortage of liquid cash due to huge withdrawals from the banking system by the depositors since the start of the holy month of Ramazan.

At the specially called open market operation (OMO) on November 19, the State Bank of Pakistan had to inject Rs15.95 billion for two weeks into the banking system through reverse repo of the Treasury bills to ease the liquidity shortage. This was the fourth injection by the central bank in the month of November. As a result of the latest injection, overnight rate fell to 0.5 per cent.

Earlier the central bank had pumped Rs7.35 billion — Rs5.85 billion for one week and Rs1.50 billion for two weeks — into the interbank money market in the first week of November. Another Rs11.3 billion were injected in the cash starve banking system on November 10 — Rs5.1 billion for one week and Rs6.2 billion for two weeks. On November 13, the State Bank of Pakistan again pumped Rs13.75 billion for two weeks. The latest injection has brought cumulative amount of Rs48.35 billion into the banking system in November so far.

According to the Statement of Affairs of the State Bank of Pakistan, for the week ended November 8, 2003, both notes in circulation and those issued increased further in the week under review. Notes in circulation stood at Rs593 ,679.381 million against earlier week’s figure of Rs581,646.852 million, showing a rise of Rs12,032.529 million. When compared to the corresponding week a year ago when it was Rs505,739.539 million, the current week’s figure is higher by Rs87,939.842 million.

Total notes issued also recorded a rise in the current week. At Rs593,828.496 million it was larger by Rs12,094.24 million over the figure of Rs581,734.256 million recorded a week earlier. In the corresponding week last year it amounted to Rs505,930.814 million, which shows current week’s figure to be higher by Rs87,897.682 million over last year’s figure.

Approved foreign exchange declined in the week, falling to Rs487,324.291 million, a fall of Rs11,365.25 million over preceding week’s figure of Rs498,689.541 million. When compared to the corresponding week a year ago, when the figure was Rs355,853.511 million, the current week’s figure was higher by Rs131,470.78 million.

Balances held outside Pakistan in approved foreign exchange showed an increase in the week under review. It stood at Rs103,198.350 million over preceding week’s figure of Rs90,817.599 million, showing a rise of Rs12,380.751 million. Compared to last year’s corresponding figure of Rs49,469.481 million, the current week’s figure is substantially higher by Rs53,728.869 million.

Loans and advances of scheduled banks to the three sectors — agricultural, industrial and export showed a mixed picture in the week under review. The agricultural sector received Rs54,947.895 million similar to preceding week’s figure. The current week’s figure is larger by Rs1,042.869 million over last year’s corresponding figure of Rs53,905.026 million.

There was an inflow of Rs2,689.105 million to the industrial sector during the week under review, depicting a decline of Rs1.724 million over previous week’s Rs2,690.829 million. When compared to last year’s corresponding figure of Rs3,257.725 million, the current week’s figure is lower by Rs568.62 million.

The export sector received Rs69,147.936 million against previous week’s figure of Rs67,056.334 million, showing a rise of Rs2,091.602 million. Current week’s figure was larger by Rs18,669.738 million over last year’s corresponding figure of Rs50,478.198 million.

According to the weekly statement of position of scheduled banks for the week ended November 8, 2003, the sum of demand and time liabilities increased further in the week under review. The sum total stood at Rs1,806,178 million against preceding week’s Rs1,805,514 million, showing a rise of Rs664 million. As compared to the total deposits of Rs1,530,664 million in the corresponding period last year, current week’s deposits were higher by Rs275,514 million.

During the week under review, demand deposits further declined while time deposits continued to rise. Demand deposits fell to Rs892,946 million, a decline of Rs11,518 million over previous week’s Rs904,464 million. It was however, higher against last year’s corresponding figure of Rs709,351 million by Rs183,595 million.

In the current week, time deposits rose over preceding week’s figure. At Rs913,029 million, it was larger by Rs11,979 million over previous week’s Rs901,050 million and higher Rs91,919 million, over last year’s corresponding figure of Rs821,313 million. Scheduled banks borrowings from the State Bank of Pakistan against promissory notes and other approved securities increased in the current week. At Rs144,029 million it was larger by Rs280 million over preceding week’s Rs143,749 million.