Cut off yield on three month, one-year T-bills increased
THE State Bank of Pakistan on April 13, increased the cut off yield on three month and one-year treasury bills to 6.39 per cent and 7.25 per cent, from 5.01 and 5.95 per cent respectively. This large increase shows that the central bank has realized that the earlier modest increase was insufficient to check inflation.
The SBP had to sell more than the targeted amount so to increase their yields, reinforcing the view that interest rates would be tightened more aggressively than in the past. The SBP sold Rs100 billion worth of these bills against the initial target amount of Rs70 billion.
The SBP raised the discount rate by 1.5 per cent to 9 per cent. The rate had been reduced to 7.5 per cent in November 2002. The recent rise was due to the increasing interest rates being adopted by SBP.
According to the Statement of Affairs of the SBP, for the week ended April 2, 2005, both notes in circulation and those issued decreased in the week. Notes in circulation stood at Rs704,218.250 million against earlier week’s figure of Rs710,677.411 million, a fall of Rs6,459.161 million. When compared to the corresponding week a year ago when it was Rs609,046.552 million, the current week’s figure is higher by Rs95,171.698 million.
Total notes issued also declined in the current week over preceding week’s level. At Rs704,420.815 million it was smaller by Rs6,419.726 million over the figure of Rs710,840.541 million recorded a week earlier. In the corresponding week last year it amounted to Rs609,247.410 million, which shows current week’s figure to be higher by Rs95,173.405 million over last year’s corresponding figure.
Approved foreign exchange decreased in the week to Rs.490,047.489 million or by Rs494.161 million over preceding week’s figure of Rs490,541.650 million. When compared to the corresponding week a year ago, when the figure was Rs512,850.321 million, the current week’s figure was smaller by Rs22,802.832 million.
Balances held outside Pakistan in approved foreign exchange fell further in the week under review. It stood at Rs129,160.120 million over preceding week’s figure of Rs129,321.672 million, a fall of Rs161.552 million. Compared to last year’s corresponding figure of Rs132,459.649 million, the current week’s figure is smaller by Rs3,299.529 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 Rs59,009.437 million similar to preceding week’s figure. The current week’s figure is larger by Rs3,333.898 million over last year’s corresponding figure of Rs55,675.539 million.
There was an inflow of Rs1,258.034 million to the industrial sector during the week under review, against preceding week’s figure of Rs.1,258.577 million, showing a fall of Rs0.543 million. When compared to last year’s corresponding figure of Rs2,387.491 million, the current week’s figure is lower by Rs1,129.457 million.
The export sector received Rs.108,499.536 million against previous week’s figure of Rs106,683.827 million, a rise of Rs1,815.709 million. Current week’s figure was larger by Rs28,640.562 million over last year’s corresponding figure of Rs79,858.974 million.
According to the weekly statement of position of scheduled banks for the week ended April 2, 2005, the sum of demand and time liabilities rose in the week under review. The sum total stood at Rs2,369,760 million against preceding week’s Rs.2,357,012 million, a rise of Rs12,748 million. As compared to the total deposits of Rs1,944,949 million in the corresponding period last year, current week’s deposits were higher by Rs424,811 million.
During the week under review, demand deposits stood at Rs.1,223,197 million, a fall of Rs10,438 million over previous week’s Rs1,233,635 million. It was however, higher against last year’s corresponding figure of Rs.967,053 million by Rs256,144 million.
Time deposits rose in the current week. At Rs1,146,563 million it was higher by Rs23,186 million over previous week’s Rs1,123,377 million and by Rs168,667 million over last year’s corresponding figure of Rs.977,896 million.
Scheduled banks borrowings from the SBP against promissory notes and other approved securities rose in the current week. At Rs181,154 million it was higher by Rs3,934 million over preceding week’s Rs177,220 million. Compared to last year’s corresponding figure of Rs151,583 million, the current week’s figure is higher by Rs29,571 million.
Scheduled banks borrowings from banks abroad stood at Rs8,021 million in the current week, as against Rs7,245 million a week ago, a rise of Rs776 million. It was also higher by Rs3,753 million over last year’s corresponding figure of Rs4,268 million.
Money at call and short notice in Pakistan fell in the week under review as against previous week’s figure. It stood at Rs30,791 million, a fall of Rs219 million over preceding week’s Rs31,010 million. When compared to last year’s corresponding figure of Rs28,729 million, the current week’s figure is higher by Rs2,062 million.
Scheduled banks’ advances including bills purchased and discounted increased in the week under review. At Rs1,704,345 million it was higher by Rs15,746 million over preceding week’s Rs1,688,599 million. Compared to the corresponding figure a year ago, when advances were to the tune of Rs1,212,389 million, the current week’s advances are higher by Rs491,956 million.
Scheduled banks investment in central government securities, Treasury bills and other approved securities showed a rise in the current week when compared to preceding week’s level. Such investments amounted to Rs.657,531 million, a rise of Rs5,058 million over previous week’s Rs652,473 million. Compared to last year’s corresponding figure of Rs770,745 million, the current week’s investment is smaller by Rs113,214 million.
