On January 27, the State Bank of Pakistan pumped in Rs11.9 billion in the inter-bank market by purchasing the Treasury bills at 5.85 per cent.
This was done through the reverse repo arrangement which means that after a week it resells the bills and drains out Rs11.9 billion from the banking system.
Overnight lending rate stood at 7.4 per cent, closer to the SBP's discount rate of 7.5 per cent. Banks were short of cash due to the withdrawals before Eid. Cash shortage was acute, and banks had to borrow overnight funds from the SBP's discount window during the month.
According to the Statement of Affairs of the State Bank of Pakistan, for the week ended January 15, 2005, both notes in circulation and those issued increased in the week.
Notes in circulation stood at Rs716,502.677 million against the earlier week's figure of Rs705,643.516 million, a rise of Rs10,859.161 million. When compared to the corresponding week a year ago when it was Rs610,063.765 million, the current week's figure is higher by Rs106,438.912 million.
Total notes issued also rose in the current week over preceding week's level. At Rs716,624.041 million it was larger by Rs10,872.457 million over the figure of Rs705,751.584 million recorded a week earlier.
In the corresponding week last year it amounted to Rs610,165.847 million, which shows current week's figure to be higher by Rs106,458.194 million over last year's corresponding figure.
Approved foreign exchange declined in the week to Rs422,827.258 million or by Rs2,684.432 million over preceding week's figure of Rs425,511.690 million. When compared to the corresponding week a year ago, when the figure was Rs505,503.105 million, the current week's figure was smaller by Rs82,674.847 million.
Balances held outside Pakistan in approved foreign exchange fell in the week under review. It stood at Rs139,089.932 million over preceding week's figure of Rs139,752.817 million, a fall of Rs662.885 million. Compared to last year's corresponding figure of Rs112,758.792 million, the current week's figure is substantially higher by Rs26,331.14 million.
Loans and advances of scheduled banks to the three sectors -- agricultural, industrial and export showed a mixed trend in the week under review. The agricultural sector received Rs57,591.444 million, similar to preceding week's figure. The current week's figure is larger by Rs2,288.305 million over last year's corresponding figure of Rs55,303.139 million.
There was an inflow of Rs1,169.387 million to the industrial sector during the week under review, similar to preceding week's figure. When compared to last year's corresponding figure of Rs2,541.154 million, the current week's figure is lower by Rs1,371.767 million.
The export sector received Rs104,897.259 million against previous week's figure of Rs103,982.168 million, a rise of Rs915.091 million. Current week's figure was larger by Rs26,658.153 million over last year's corresponding figure of Rs78,239.106 million.
