Under the Treasury Bills auction held on May 21, the State Bank of Pakistan mopped up Rs3.5bn against the total participation of Rs10.77bn.

The auction was conducted in 3-month and 12-month T-Bills. 3-month treasury bills realised Rs2.45bn at the cut off yield of 9.97 per cent, up 20 basis points from the existing rate while 12–month T-bills mopped up Rs1.06bn at the cut off yield of 10.34 per cent. The cut off yield for 12-months tenor was higher by 10 basis points.

Meanwhile the State Bank of Pakistan raised discount rate to 12 per cent effective May 23, 2008. This was second increase since February when central bank had raised discount rate by 0.5 to 10.5 per cent. At the same time, the bank has also raised Cash Reserve Requirement (CRR) for deposits up to one year maturity by 100 bsp to nine per cent while keeping CRR for deposits of over one year maturity unchanged at zero percent. The Statutory Liquidity Requirement (SLR) has also been increased by 100bsp to 19 per cent of the total time and demand liabilities. The State Bank moved aimed at tightening monitory policy to curb inflation and widening fiscal, trade and current account payment deficits.

According to the Statement of Affairs of the State Bank of Pakistan, for the week ended May 10, 2008, both notes in circulation and those issued increased in the week. Notes in circulation stood at Rs1,074.682bn against earlier week’s figure of Rs1,045.961bn, a rise of Rs28.721bn. When compared to the corresponding week a year ago when it was Rs916.364bn, the current week’s figure is higher by Rs158.318bn.

Total notes issued also increased in the current week over preceding week’s level. At Rs1,074.803bn it was larger by Rs28.692bn over the figure of Rs1,046.111bn recorded a week earlier. In the corresponding week last year it amounted to Rs916.535bn, which shows current week’s figure to be higher by Rs158.268bn over last year’s corresponding figure.

Approved foreign exchange increased in the week to Rs519.200bn or by Rs0.162bn over preceding week’s figure of Rs519.038bn. When compared to the corresponding week a year ago, when the figure was Rs598.263bn, the current week’s figure is lower by Rs79.063bn.

Balances held outside Pakistan in approved foreign exchange increased in the week under review. It stood at Rs165.395bn over preceding week’s figure of Rs135.571bn, a rise of Rs29.824bn. Compared to last year’s corresponding figure of Rs135.567bn, the current week’s figure is larger by Rs29.828bn.

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 Rs49.777bn, similar to preceding week’s figure. The current week’s figure is smaller by Rs9.946bn over last year’s corresponding figure of Rs59.723bn.

There was an inflow of Rs39.943bn to the industrial sector during the week under review, a fall of Rs0.045bn against preceding week’s figure of Rs39.988bn. When compared to last year’s corresponding figure of Rs41.926bn, the current week’s figure is smaller by Rs1.983bn.

The export sector received Rs99.003bn against previous week’s figure of Rs97.871bn, higher by Rs1.132bn. Current week’s figure was smaller by Rs39.255bn over last year’s corresponding figure of Rs138.258bn.

According to the weekly statement of position of all scheduled banks for the week ended May 10, 2008, deposits and other accounts of the scheduled banks stood at Rs3,649.089bn, smaller by Rs20.51bn over preceding week’s figure of Rs3,669.599bn. Commercial banks deposits showed a decreased of Rs20.86bn over the week to Rs3,636.265bn, against preceding week’s Rs3,657.125bn. Specialised banks deposits stood at Rs12.824bn, against preceding week’s Rs12.474bn, a rise of Rs0.35bn.

Borrowings by all scheduled banks increased during the week over preceding week’s figure. It rose to Rs442.262bn over preceding week’s figure of Rs421.917bn, a rise of Rs20.345bn. This was primarily due to a fall in the borrowings by commercial banks, which rose to Rs361.359bn against previous week’s Rs340.503bn, or by Rs20.856bn. Borrowings by specialised banks stood at Rs80.903bn, against preceding week’s figure of Rs81.413bn.

Gross advances stood at Rs2,914.451bn in the week under review, a rise of Rs10.268bn over preceding week’s figure of Rs2,904.183bn. Advances by commercial banks rose to Rs2,817.868bn against earlier week’s figure of Rs2,807.759bn, or by Rs10.109bn. Advances of specialised banks stood at Rs96.584bn, larger by Rs0.160bn over earlier week’s figure of Rs96.424bn.