Surge in Currency in Circulation: Rs188 Billion Increase Within a Week
Karobar
The latest data from the State Bank of Pakistan (SBP) reveals a notable uptick in the currency in circulation within the economy, soaring by Rs188.1 billion week-on-week to reach Rs8.6 trillion as of January 5, 2024. These provisional figures on Monetary Aggregates underscore a dynamic shift in financial liquidity.
In contrast to the corresponding period last fiscal year, the current fiscal year witnesses a reduction in the currency in circulation by Rs551.87 billion, marking a decrease from Rs9.15 trillion at the end of June 2023.
The broader monetary measure, known as Broad Money (M2), experienced a decline of Rs402.6 billion week-on-week, settling at Rs32.4 trillion as of January 5, 2024. However, comparing this to June 2023, M2 reflects an upward trajectory, surging by Rs880.06 billion from the end of the last fiscal year when it stood at Rs31.52 trillion.
Examining the relationship between currency in circulation and M2, the former constitutes 26.53% of the latter as of January 5, 2024. This percentage is a notable increase from the previous week's 25.63% and a decline from the 29.02% reported in June 2023.
Total deposits with banks, excluding inter-bank deposits, government deposits, and foreign constituents, were recorded at Rs23.69 trillion. This represents a significant week-on-week decrease of Rs589.29 billion. However, on a fiscal year-to-date basis, there is an overall increase of Rs1.43 trillion.
It is crucial to note that currency in circulation encapsulates the combined value of banknotes and coins in circulation, encompassing holdings by both the general public and financial institutions.
In the context of Pakistan's financial landscape, M2 serves as the predominant definition of broad money. On the liability side, M2 includes the sum of currency in circulation, total deposits of the non-government sector (including residents’ foreign currency deposits), and other deposits with SBP. On the asset side, M2 is the sum of net domestic assets and net foreign assets of the banking system, comprising both SBP and scheduled banks.
