The State Bank of Pakistan (SBP) has released provisional figures on Monetary Aggregates, revealing notable shifts in the country’s monetary landscape.
As of March 8, 2024, the currency in circulation has seen a significant weekly increase, climbing by Rs252.98 billion to reach Rs8.66 trillion. This marks a substantial change within a short span.
In contrast, the overall trend for the current fiscal year indicates a decrease in currency circulation, with a drop of Rs485.71 billion compared to the figure recorded at the end of June 2023, which stood at Rs9.15 trillion.
Turning to broad money (M2), a key indicator of money supply in Pakistan, there has been a noteworthy decline of Rs206.59 billion week-on-week, bringing the total to Rs32.48 trillion by March 8, 2024.
However, when juxtaposed with June 2023, M2 has experienced a significant increase, rising by Rs957.18 billion from the previous fiscal year’s end balance of Rs31.52 trillion.
The ratio of currency in circulation to M2, a crucial metric for understanding liquidity dynamics, stood at 26.67%, indicating a slight uptick compared to the previous week’s 25.73% and a decrease from the June 2023 figure of 29.02%.
Meanwhile, total deposits held with banks have shown mixed trends. The latest data reveals a weekly decrease of Rs468.69 billion, amounting to Rs23.69 trillion.
However, on a fiscal year-to-date basis, there has been an overall increase of Rs1.43 trillion.
It’s important to note that these deposit figures exclude certain categories such as inter-bank deposits, government deposits, and those from foreign entities.
Currency in circulation encompasses the total value of banknotes and coins held by both the general public and financial institutions.
In Pakistan, M2 serves as the primary measure of broad money, encompassing various forms of currency and deposits.
From a liability perspective, M2 comprises currency in circulation, total non-government sector deposits (including resident foreign currency deposits), and other deposits held with the SBP.
On the asset side, M2 includes the net domestic assets and net foreign assets of the banking system, incorporating both the SBP and scheduled banks.
