THE State Bank of Pakistan has made a modest cut in Treasury bill yields. On three-month bills, it has lowered the maximum yield by 18 basis points (bps), on six-month and one year bills by 12 bps and 7 bps respectively.

The new cut-off yield are 10 per cent for three months; 10.39 per cent for 6 months and 10.79 per cent for one year. The SBP rate cut signals that the short-term interest rates are going to ease marginally.

According to the Statement of Affairs of the State Bank for the week ended September 29, both notes in circulation and those issued showed an increase in the week under review. Notes in circulation stood at Rs397,515.218 million against preceding week’s Rs397.063.346 million, showing an increase of Rs451.872 million. When compared to the corresponding week a year ago when it was Rs354,085.187 million, the current week’s figure is higher by Rs43,430.031 million.

The total notes issued also showed a rise in the current week. At Rs397,722.034 million it was higher by Rs374.1 million over a week earlier figure of Rs397,347.934 million. In the corresponding week last year it amounted to Rs354,231.650 million, which shows an increase of Rs43,490.384 million over the year.

The approved foreign exchange, dropped in the week under review. It stood at Rs116,173.189 million, showing a decrease of Rs11,783.787 million over previous week’s Rs127,956.976 million. When compared to last year’s corresponding figure of Rs49,693.086 million, the current week’s figure is higher by Rs66,480.103 million.

Balances held outside Pakistan in approved foreign exchange, more than doubled in the week under review. It stood at Rs19,918.451 million over preceding week’s figure of Rs6,779.759 million, showing an increase of Rs13,138.692 million. Compared to last year’s corresponding figure of Rs10,253.395 million, the current week’s figure is larger by Rs9,665.056 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 Rs54,504.995 million, lower by Rs59.985 million over preceding week’s figure of Rs54,564.980 million. The current week’s figure is larger by Rs5,447.455 million over last year’s corresponding figure of Rs49,057.540 million.

There was an inflow of Rs4,041.599 million in the industrial sector during the week under review, depicting a decrease of Rs6.359 million over previous week’s Rs4,047.958 million. Compared to last year’s corresponding figure of Rs4,960.057 million, the current week’s figure is lower by Rs918.458 million.

The export sector received Rs59,758.006 million over previous week’s Rs60,698.570 million, showing a decline of Rs940.564 million. Current week’s figure was lower by Rs14,686.39 million over last year’s corresponding figure of Rs74,444.396 million.

According to the weekly statement of position of scheduled banks for the week ended September 22, 2001 the sum of demand and time liabilities showed a decrease as both type of deposits showed a drop in the week under review. The sum total stood at Rs1,294,064 million against preceding week’s Rs1,316,191 million, showing a fall of Rs22,127 million. As compared to the total deposits of Rs1,202,611 million in the corresponding period last year, current week’s deposits were higher by Rs91,453 million.

During the week under review, demand deposit fell to Rs567,308 million, or by Rs11,557 million over previous week’s Rs578,865 million but was higher against last year’s corresponding figure of Rs503,114 million by Rs64,194 million.

In the current week, time deposits were lower over the preceding week, but higher against the corresponding week last year. At Rs726,756 million it was smaller by Rs10,570 million over previous week’s Rs737,326 million, but higher by Rs27,259 million against last year’s corresponding figure of Rs699,497 million.

Scheduled banks borrowings from the State Bank of Pakistan against promissory notes and other approved securities rose in the current week. At Rs126,214 million it was larger by Rs1,505 million over preceding week’s Rs124,709 million. Compared to last year’s corresponding figure of Rs134,882 million, the current week’s figure is lower by Rs8,668 million.

Scheduled banks borrowings from banks abroad stood at Rs15,741 million in the current week, as against Rs13,425 million a week ago, showing a rise of Rs2,316 million. It was lower by Rs14,526 million over last year’s corresponding figure of Rs30,267 million.

Money at call and short notice in Pakistan showed an increase in the week under review. It stood at Rs39,185 million, showing an increase of Rs1,118 million over preceding week’s Rs38,067 million. Current week’s figure was lower by Rs870 million against last year’s corresponding figure of Rs40,055 million.

The scheduled banks advances including bills purchased and discounted, showed a rise in the week under review. At Rs918,796 million it was higher by Rs1,400 million over preceding week’s Rs917,396 million. Compared to the corresponding figure a year ago, when advances were to the tune of Rs844,651 million, the current weeks advances are higher by Rs74,145 million.

The scheduled banks investment in central government securities, Treasury bills and other approved securities recorded a decline in the week under review, such investment amounted to Rs271,658 million, a fall of Rs58,691 million over previous week’s Rs330,349 million.