The State Bank is still finalising its balance sheet as at the close of FY05. So, it did not publish its provisional weekly accounts for the third week in succession leaving monetary analysis restricted only to scheduled banks.
According to provisional data on scheduled banks' accounts for the week ended on July 16, 2005 and available at SBP website as of August 05, 2005, their total assets/liabilities increased by Rs 69 billion during the last three weeks, including an increase of Rs 8 billion in the last week.
In the meanwhile, on their liabilities side, customers' time deposits increased by as much as Rs 50 billion in the preceding three weeks with Rs 13 billion finding inroads in the last week alone.
During the same period, net foreign assets of scheduled banks- being the net balance of their foreign assets and foreign liabilities- rose by Rs 7 billion meaning that during the last three weeks the banks not only financed the ever increasing import bill, they were able even to conserve a part of the foreign exchange received by them during the period contributing thus to overall monetary expansion.
In the last two months of FY05, on average banks received $358 million as workers remittances. If this level was maintained in July as well, banks should have received somewhere $179 million in foreign remittances (or about Rs 11 billion in rupee terms) during the first half of July.
Increase in country's overall reserves (cf. last section of this review), which means that besides remittances an increasing amount of export receipts was also surrendered to scheduled banks and from there to the State Bank, also suggests that more such receipts were converted into Resident Foreign Currency Deposits (RFCDs). Indeed, major part of the rupee counterpart, received by the beneficiaries, remains with the banks in the form of deposits- mainly time deposits.
Demand deposits, on the other hand, declined by only Rs 4 billion during the same period, Rs 1.2 billion of them in the last week. All in all, deposit money in the form of customers time and demand deposits during the last three weeks increased by Rs 46 billion, including Rs 11.8 billion in the week ended on July 16, 2005. Other important developments on the liabilities side of scheduled banks as of July 16, 2005 compared with relevant data three weeks ago included an increase of Rs 12.7 billion in 'other liabilities' (Rs 0.5 billion in the last week) partly offset by declines of Rs 2.7 billion in 'borrowings from banks abroad' and Rs 4.8 billion in 'money at call' (Rs 2.1 billion in the last week).
On the assets side, scheduled banks advances increased by Rs 9.6 billion (viz, 'advances other than those to banks' and 'bills purchased and discounted' rising by Rs 7.2 billion & Rs 2.4 billion, respectively) during the three weeks ended on July 16, 2005.
These loans were extended to the private sector (including export sector), PSEs, and the government (commodity operations). The increase occurring during the week under review was Rs 6.1 billion. A look on the assets side further showed that their 'other investments', representing part of banks' credit to the private sector in the form of investments in the corporate paper like TFCs and PTCs and other stocks, increased by Rs5.7 billion.
Scheduled banks' investments in Federal government securities/treasury bills and 'other approved securities' increased by Rs 16.7 billion during the past three weeks being largely the budgetary borrowings of the government from scheduled banks- a figure subject to change on availability of actual figures of government deposits with scheduled banks. Other assets of scheduled banks increased by Rs 9.4 billion during the same period.
In nutshell, scheduled banks credit to various economic agents in the economy increased by about Rs 42 billion during the week.
The rupee witnessed marginal fluctuations in the FE market during the week ended on July 16, 2005 both because of subdued corporate demand and improved supply of dollars.
The eased supply position of dollars could be gauged from the fact that the country's foreign exchange reserves increased to $12,671 million in the week ending on July 9, 2005 compared with $12,627 million as of June 25,2005- an increase of $44 million in just two weeks compared with successive declines since the peak ($12,976 million) was reached on April 30, 2005.
The result was that in the open market, trading was largely range-bound with local currency firmly holding on to its levels for buying and selling at Rs 60.45 and Rs 60.50.
In the inter-bank market, the rupee lost three paisa against the dollar for buying and selling at Rs 59.61 and Rs 59.63. The domestic currency, however, shed 50 paisa versus the Euro for buying and selling at Rs 72.70 and Rs 73.00.
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