This week the State Bank of Pakistan (SBP) left much of the excess liquidity in the inter-bank market to help banks finance the year-end withdrawals.

At the Treasury Bills auction held on December 26, the central bank mopped up bills worth Rs9.3 billion against the accepted bids of Rs9.7 billion at a discounted rate. It had set a target of Rs20 billion for this auction.

The bank lifted Rs982.7 million for three months tenor at the rate of 7.6496 per cent, Rs5.916 billion for six months’ tenor at the rate of 7.9869 per cent and for Rs2.408 billion for one year at the rate of 8.4006 per cent. While conducting the Treasury bills auction, the bank lowered its yield on six months to 7.98 per cent from 8.16 per cent and on one year to 8.4 per cent from 8.54 per cent. The three months yield has been slashed by 32 basis points to 7.96 per cent. During the last tender, the auction for three months was scrapped.

Since July the central bank has lowered the yield on six-month bills by 4.58 per cent on six-month treasury bills and by 3.54 per cent on one-year Treasury Bills. Major slashing in T-bills yield has taken place in this quarter. The cut-off yield on the Treasury Bills started falling in July with one per cent cut in the SBP discount rate.

According to the Statement of Affairs of the State Bank of Pakistan, for the week ended December 22, 2001, both notes in circulation and those issued declined as against the rise witnessed in the earlier week. Notes in circulation stood at Rs468,966.531 million against preceding week’s Rs470,037.585 million, showing a fall of Rs1,071.054 million. As compared to the corresponding week a year ago when it was Rs423,244.893 million, the current week’s figure is higher by Rs45,721.638 million.

Total notes issued also showed a decline in the current week. At Rs469,077.530 million it was smaller by Rs1,092.233 million over a week earlier figure of Rs470,169.753 million. In the corresponding week last year it amounted to Rs423,316.084 million, which shows an increase of Rs45,761.446 million over the year.

The approved foreign exchange showed a small fall in the week under review. It stood at Rs138,211.673 million, showing a decline of Rs234.244 million over previous week’s Rs138,445.917 million. When compared to last year’s corresponding figure of Rs57,790.599 million, the current week’s figure is substantially higher by Rs80,421.074 million. Balances held outside Pakistan in approved foreign exchange, rose in the week as against a fall a week earlier. It stood at Rs70,194.138 million over preceding week’s figure of Rs60,621.531 million, showing rise of Rs9,572.607 million. Compared to last year’s correspondent figure of Rs28,572.097 million, the current week’s figure is larger by Rs41,622.041 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 Rs53,867.369 million, similar to preceding week’s figure. The current week’s figure is, however, smaller by Rs1,429.716 million over last year’s corresponding figure of Rs55,297.085 million.

There was an inflow of Rs3,876.755 million in the industrial sector during the week under review, depicting a decline of Rs7.365 million over previous week’s Rs3,884.120 million. Compared to last year’s corresponding figure of Rs4,746.373 million, the current week’s figure is lower by Rs869.618 million.

The export sector received Rs49,186.830 million over previous week’s figure of Rs48,742.251 million, showing a rise of Rs444.759 million. Current week’s figure was lower by Rs28,775.321 million over last year’s corresponding figure of Rs77,962.151 million.

According to the weekly statement of position of scheduled banks for the week ended December 08, 2001, the sum of demand and time liabilities continued to rise, due to an increase in both demand and time deposits in the week. The sum total stood at Rs1,337,393 million against preceding week’s Rs1,327,496 million, showing an increase of Rs9,897 million. As compared to the total deposits of Rs1,209,956 million in the corresponding period last year, current week’s deposits were higher by Rs127,437 million.

During the week under review, demand deposits rose to Rs588,667 million, or by Rs 1,483 million over previous week’s Rs587,184 million, and was also higher against last year’s corresponding figure of Rs513,494 million by Rs75,173 million.

In the current week, time deposits were higher over the preceding week, and against the corresponding week last year. At Rs748,726 million it was higher by Rs8,414 million over previous week’s Rs740,312 million, and by Rs52,264 million, over last year’s corresponding figure of Rs696,462 million.

Scheduled banks borrowings from the State Bank of Pakistan against promissory notes and other approved securities rose in the current week. At Rs117,689 million it was higher by Rs984 million over preceding week’s Rs116,705 million. Compared to last year’s corresponding figure of Rs154,518 million, the current week’s figure is lower by Rs36,829 million.

Scheduled banks borrowings from banks abroad stood at Rs15,369 million in the current week, as against Rs15,256 million a week ago, showing a rise of Rs113 million. It was lower by Rs18,746 million over last year’s corresponding figure of Rs34,115 million.