June 18, 2007	Monday	Jumadi-us-Sani 02, 1428

The State Bank of Pakistan conducted the Open Market Operation (OMO) on June 13, presumably to suck excess liquidity from the market.

Under the OMO the bank mopped up Rs23.7 billion for three days at 8.45 per cent against the total participation of Rs24.7bn. Due to excess liquidity, the daily lending rates were under downward pressure. Since the bank is keeping a tight monetary stance, most treasury officials viewed conducting of this week’s OMO as SBP move to lift interest rates.

According to the Statement of Affairs of the State Bank of Pakistan, for the week ended July 2June 2, 2007, both notes in circulation and those issued decreased in the week. Notes in circulation stood at Rs901,120.082m against earlier week’s figure of Rs903,257.265m, a fall of Rs2,137.183m. When compared to the corresponding week a year ago when it was Rs793,533.429m, the current week’s figure is higher by Rs107,586.653m.

Total notes issued also fell in the current week over preceding week’s level. At Rs901,312.020m it was smaller by Rs2,113.497m over the figure of Rs903,425.517m recorded a week earlier. In the corresponding week last year it amounted to Rs793,702.610m, which shows current week’s figure to be higher by Rs107,609.41m over last year’s corresponding figure.

Approved foreign exchange increased in the week to Rs629,040.057m or by Rs29,929.614m over preceding week’s figure of Rs599,110.443m. When compared to the corresponding week a year ago, when the figure was Rs540,773.422m, the current week’s figure is higher by Rs88,266.635m.

Balances held outside Pakistan in approved foreign exchange decreased in the week under review. It stood at Rs105,337.013m over preceding week’s figure of Rs136,311.109m, a fall of Rs30,974.096m. Compared to last year’s corresponding figure of Rs124,766.549m, the current week’s figure is smaller by Rs19,429.536m.

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 Rs60,183.528m, similar to preceding week’s figure. The current week’s figure is smaller by Rs1,460.454m over last year’s corresponding figure of Rs61,643.982m.

There was an inflow of Rs42,212.726m to the industrial sector during the week under review, a rise of Rs6.95m against preceding week’s figure of Rs42,205.776m. When compared to last year’s corresponding figure of Rs6,550.912m, the current week’s figure is higher by Rs35,661.814m.

The export sector received Rs136,895.788m against previous week’s figure of Rs138,394.036m, a fall of Rs1,498.248m. Current week’s figure was larger by Rs28,126.845m over last year’s corresponding figure of Rs108,768.943m.

According to the weekly statement of position of all scheduled banks for the week ended June 2, 2007, deposits and other accounts of the scheduled banks stood at Rs3,266.171bn, higher by Rs40.054bn over preceding week’s figure of Rs3,226.117bn. Commercial banks deposits showed a rise of Rs40.052billion over the week to Rs3,254.559bn, against preceding week’s Rs3,214.507bn, while of specialized banks it rose by Rs0.002bn to Rs11.612bn, over previous week’s Rs11.610bn.

Borrowings by all scheduled banks increased during the week over preceding week’s figure. It rose to Rs416.456bn over preceding week’s figure of Rs403.459bn, a rise of Rs12.997bn. This was primarily due to a rise in the borrowings by commercial banks, which rose to Rs333.033bn against previous week’s Rs320.037bn, or by Rs12.996bn, while borrowings by specialised banks stood at Rs83.423bn, similar to preceding week’s figure.

Gross advances stood at Rs2,444.591bn in the week under review, an increase of Rs14.501bn over preceding week’s figure of Rs2,430.090bn. Advances by commercial banks rose to Rs2,350.482bn against earlier week’s figure of Rs2,335.942bn, or by Rs14.54bn, while of specialized banks it stood at Rs94.109bn against preceding week’s Rs94.148bn, showing a fall of Rs0.039bn.