Surge in Currency Circulation with a Rs61 Billion Increase in Just One Week
Karobar
The amount of currency in circulation within the economy witnessed a notable upswing, surging by Rs61 billion in the week ending January 12, 2024, as per the provisional data compiled by the State Bank of Pakistan (SBP) in its Monetary Aggregates report.
As of January 12, 2024, the total currency in circulation reached Rs8.66 trillion, marking a Week-on-Week (WoW) increase of Rs60.7 billion. However, it's noteworthy that over the current fiscal year, there has been a decrease of Rs491.16 billion in the circulating currency compared to the Rs9.15 trillion recorded at the close of June 2023.
The broader measure of money supply, known as Broad Money (M2) and widely used in Pakistan, experienced a decline of Rs209.85 billion WoW, resting at Rs32.19 trillion on January 12, 2024. In contrast, when compared to June 2023, M2 has seen an increase of Rs670.21 billion, rising from Rs31.52 trillion at the end of the last fiscal year.
The ratio of currency in circulation to M2 stood at 26.89%, exhibiting a slight rise from 26.53% in the previous week but a decrease from 29.02% recorded in June 2023.
Total deposits in banks were registered at Rs23.42 trillion, showing a WoW decrease of Rs267.78 billion. However, on a Year-to-Date (FYTD) basis, there has been an increase of Rs1.16 trillion.
It's crucial to note that the reported bank deposits exclude inter-bank deposits, government deposits, and deposits from foreign entities.
Currency in circulation represents the aggregate of banknotes and coins available to the public and financial institutions. In the context of Pakistan, M2 is the widely accepted definition of broad money.
On the liability side, M2 encompasses the sum of currency in circulation, total deposits from the non-government sector (including residents’ foreign currency deposits), and other deposits with the SBP.
From the asset perspective, M2 comprises the sum of net domestic assets and net foreign assets of the banking system, encompassing both the SBP and scheduled banks.
