On June 23, the State Bank of Pakistan rejected bids for six month treasury bills to keep their yields from rising too sharply. The central bank had set Rs50 billion target for the sale of six month bills.

The auction attracted Rs41.6 billion bids, but the central bank rejected all of them. The central bank has wanted to avoid a big increase in T-bill yields, as it would have sent a signal to the market that interest rates are picking up.

According to the Statement of Affairs of the State Bank of Pakistan, for the week ended June 12, both notes in circulation and those issued showed a further rise in the week. Notes in circulation stood at Rs624,550.501 million against earlier week's figure of Rs620,571.091 million, showing a rise of Rs3,979.41 million. When compared to the corresponding week a year ago when it was Rs539,573.064 million, the current week's figure is higher by Rs80,998.027 million.

Total notes issued also recorded a rise in the current week over preceding week's level. At Rs624,732.436 million it was larger by Rs3,998.942 million over the figure of Rs620,733.494 million recorded a week earlier. In the corresponding week last year it amounted to Rs539,745.935 million, which shows current week's figure to be higher by Rs84,986.501 million over last year's corresponding figure.

Approved foreign exchange increased in the week, rising to Rs436,771.856 million or by Rs1,487.854 million over preceding week's figure of Rs435,284.002 million. When compared to the corresponding week a year ago, when the figure was Rs466,304.689 million, the current week's figure was higher by Rs29,532.833 million.

Balances held outside Pakistan in approved foreign exchange declined in the week under review. It stood at Rs196,245.284 million over preceding week's figure of Rs201,514.492 million, showing a fall of Rs5,269.208 million. Compared to last year's corresponding figure of Rs92,723.354 million, the current week's figure is substantially higher by Rs103,521.93 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 Rs56,055.539 million, similar to preceding week's figure. The current week's figure is larger by Rs1,550.796 million over last year's corresponding figure of Rs54,504.743 million.

There was an inflow of Rs2,356.668 million to the industrial sector during the week under review, against preceding week's figure of Rs2,363.429 million, showing a decline of Rs6.761 million. When compared to last year's corresponding figure of Rs2,842.576 million, the current week's figure is lower by Rs485.908 million.

The export sector received Rs86,406.375 million against previous week's figure of Rs86,413.936 million, showing a fall of Rs7.561 million. Current week's figure was larger by Rs30,906.53 million over last year's corresponding figure of Rs55,499.845 million.

According to the weekly statement of position of scheduled banks for the week ended June 12, 2004, the sum of demand and time liabilities increased further in the week under review. The sum total stood at Rs2,054,550 million against preceding week's Rs2,040,995 million, showing a rise of Rs.13,555 million. As compared to the total deposits of Rs1,711,834 million in the corresponding period last year, current week's deposits were higher by Rs342,716 million.

During the week under review, demand deposits stood at Rs1,026,963 million, a fall of Rs9,021 million over previous week's Rs1,017,942 million. It was higher against last year's corresponding figure of Rs795,950 million by Rs231,013 million.

Time deposits rose in the current week over preceding week's figure. At Rs1,027,587 million it was larger by Rs4,534 million over previous week's Rs1,023,053 million and by Rs111,703 million over last year's corresponding figure of Rs.915,884 million.

Scheduled banks borrowings from the State Bank of Pakistan against promissory notes and other approved securities declined in the current week. At Rs156,801 million it was smaller by Rs.2,912 million over preceding week's Rs159,713 million. Compared to last year's corresponding figure of Rs135,490 million, the current week's figure is higher by Rs21,311 million.

Scheduled banks borrowings from banks abroad stood at Rs5,393 million in the current week, as against Rs.5,159 million a week ago, showing a rise of Rs234 million. It was smaller by Rs12,768 million over last year's corresponding figure of Rs18,161 million.