ON November 14, 2001, the State Bank of Pakistan (SBP) reduced the cut-off yield on the Treasury bills by 11-23 basis points.
Earlier on October 31, it had reduced the cut-off yield by 1.64-1.81 per cent, following a 2 per cent reduction in its discount rate announced on October 20. The return on 6 months Treasury bills have been reduced to 8.39 per cent. The auction of the bills on reduced rates generated Rs7.5 billion, while the auction had attracted bids worth Rs13.25 billion.
The SBP on November 16, injected Rs4.4 billion into the inter-bank market, as the banks are experiencing a serious liquidity crunch. So the banks had to borrow overnight funds from the central bank at a fixed discounting rate of 10 per cent.
According to the Statement of Affairs of the State Bank of Pakistan, for the week ended November 10, 2001, both notes in circulation and those issued continued to show an increase in the week. Notes in circulation stood at Rs440,321.367 million against the preceding week’s Rs425,590.956 million, showing an increase of Rs14,730.411 million. When compared to the corresponding week a year ago, when it was Rs389,659.755 million, the current week’s figure is higher by Rs50,661.612 million.
Total notes issued also showed a rise in the current week. At Rs440,498.308 million, it was higher by Rs14,692.394 million over a week earlier figure of Rs425,805.914 million. In the corresponding week last year, it amounted to Rs389,811.847 million, which shows an increase of Rs50,686.461 million over the year.
The approved foreign exchange, continued to show an upward trend in the week under review It stood at Rs133,031.932 million, showing a rise of Rs8,947.36 million over the previous week’s Rs124,084.572 million. When compared to last year’s corresponding figure of Rs42,805.204 million, the current week’s figure is substantially higher by Rs90,226.728 million.
The balances held outside Pakistan in approved foreign exchange, declined in the week under review. It stood at Rs16,815.193 million over preceding week’s figure of Rs23530.042 million, showing a decrease of Rs6,714.849 million. Compared to last year’s corresponding figure of Rs18,835.378 million, the current week’s figure is smaller by Rs2,020.185 million.
The 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 Rs54,291.790 million, similar to preceding week’s figure. The current week’s figure is larger by Rs380.604 million,over last year’s corresponding figure of Rs53,911.186 million.
There was an inflow of Rs3,942.231 million in the industrial sector during the week under review, depicting a decrease of Rs7.45 million over previous week’s Rs3,949.681 million. Compared to last year’s corresponding figure of Rs4,871.977 million, the current week’s figure is lower by Rs929.746 million.
The export sector received Rs53,975.777 million over previous week’s Rs54,658.528 million, showing a fall of Rs682.751 million.
Current week’s figure was lower by Rs23,909.428 million over last year’s corresponding figure of Rs77,885.205 million.