December 25, 2006	Monday	Zilhaj 03, 1427

THE money market remained tight this week. At the Treasury Bills auction on December 20, the State Bank of Pakistan accepted bids worth Rs16.45 billion, slightly over 20 per cent of the target of Rs80 billion set by the bank for T-bills auction and 13 per cent less than the bids offered. Banks had offered higher bids valuing Rs18.95 billion to get higher returns.

The break-up of auction reveals that the central bank accepted three-month T-bills of the value of Rs294.15 million at 8.6417 per cent, 6-month T-bills for Rs1.25 billion at 8.8142 per cent and 12-month T-bills of Rs14.91 billion at 0.0046 per cent. Due to tight monetary policy, the cut-off yield this week remained unchanged.

Meanwhile, the State Bank of Pakistan also conducted 36th PIB auction this week in which it mopped up Rs19.72 billion, just Rs0.3 billion short of the Rs20 billion target set for this purpose but Rs15.33 billion less than the offered amount of Rs35.05 billion. This was the third PIB auction since May 19 and second during the current fiscal year.

The auction was conducted for three-year, five-year, 10-year, 15-year, 20-year and 30-year PIBs. It was held on December 21, a day after the bank had carried out Treasury Bills auction. In this week PIBs auction, the bank accepted Rs725 million for three years at a cut-off yield of 9.74 per cent, Rs300 million for 5-years at a cut-off yield of 10.0017 per cent, Rs2.70 billion for 10-year at 10.53 per cent, Rs4 billion for 15-years at 11.10 per cent, Rs4 billion for 20-year at 11.42 per cent and Rs8 billion for a new issue of 30-year at 11.70 per cent.

The central bank accepted bids for 5-year, 15-year and 20-year PIBs at higher cut-off yields, while cut off yields for 3-year and 10-year PIBs were lowered. Almost 90 per cent of the bonds amount was reportedly offered by the non-banking sector.

According to the Statement of Affairs of the State Bank of Pakistan, for the week ended December 9, 2006, both notes in circulation and those issued increased in the week. Notes in circulation stood at Rs878,029.317 million against earlier week’s figure of Rs857,115.379 million, a rise of Rs20,913.938 million. When compared to the corresponding week a year ago when it was Rs793,525.611 million, the current week’s figure is higher by Rs84,503.706 million.

Total notes issued also rose in the current week over preceding week’s level. At Rs878,155.860 million it was larger by Rs20,873.823 million over the figure of Rs857,282.037 million recorded a week earlier. In the corresponding week last year it amounted to Rs793,812.662 million, which shows current week’s figure to be higher by Rs84,343.198 million over last year’s corresponding figure.

Approved foreign exchange increased in the week to Rs531,797.504 million or by Rs23,299.975 million over preceding week’s figure of Rs508,497.529 million. When compared to the corresponding week a year ago, when the figure was Rs413,887.696 million, the current week’s figure is higher by Rs117,909.808 million.

Balances held outside Pakistan in approved foreign exchange fell in the week under review. It stood at Rs132,241.119 million over preceding week’s figure of Rs132,694.798 million, a fall of Rs453.679 million. Compared to last year’s corresponding figure of Rs144,758.885 million, the current week’s figure is larger by Rs12,517.766 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 Rs63,182.785 million, similar to preceding week’s figure. The current week’s figure is larger by Rs2,055.888 million over last year’s corresponding figure of Rs61,126.897 million.

There was an inflow of Rs25,693.768 million to the industrial sector during the week under review, a rise of Rs2,440.982 million against preceding week’s figure of Rs23,252.786 million. When compared to last year’s corresponding figure of Rs2,406.395 million, the current week’s figure is higher by Rs23,287.373 million.

The export sector received Rs126,124.957 million against previous week’s figure of Rs125,332.261 million, a rise of Rs792.696 million. Current week’s figure was larger by Rs20,704.398 million over last year’s corresponding figure of Rs105,420.559 million.

According to the weekly statement of position of all scheduled banks for the week ended December 9, 2006, deposits and other accounts of the scheduled banks stood at Rs2,923.065 billion, higher by Rs0.394 billion over preceding week’s figure of Rs2,922.671 billon. Commercial banks deposits showed an increase of Rs0.454 billion over the week to Rs2,911.073 billion, against preceding week’s Rs2,910.619 billion, while of specialized banks it fell by Rs0.061 billion to Rs11.991 billion, over previous week’s Rs12.052 billion.

Borrowings by all scheduled banks increased during the week over preceding week’s figure. It rose to Rs385.195 billion over preceding week’s figure of Rs381.639 billion, a rise of Rs3.556 billion. This was primarily due to an increase in the borrowings by commercial banks, which rose to Rs296.333 billion against previous week’s Rs293.017 billion, or by Rs3.316 billion, while borrowings by specialised banks stood at Rs88.862 billion, against preceding week’s figure of Rs88.622.

Gross advances stood at Rs2,307.807 billion in the week under review, a fall of Rs1.076 billion over preceding week’s figure of Rs2,308.883 billion. Advances by commercial banks fell to Rs2,211.074 billion against earlier week’s figure of Rs2,212.764 billion, higher by Rs1.690 billion, while of specialized banks it stood at Rs96.733 billion against preceding week’s Rs96.119 billion, showing an increase of Rs0.614 billion.

Investments of all scheduled banks increased in the week by Rs9.048 billion to Rs825.663 billion against preceding week’s figure of Rs816.615 billion. Commercial banks investment rose to Rs813.606 billion, from earlier week’s Rs805.902 billion, higher by Rs7.704 billion, while of specialized banks it stood at Rs12.057 billion against previous week’s Rs10.714 billion, larger by Rs1.343 billion.