While the State Bank failed to update monetary data on its web-site for the fourth week in a row - a rare occurring in this period of the year (cf. BR issue of 17-12-2005 for the background story), scheduled banks accounts available for December 10, 2005 revealed that scheduled banks advances (net of provisions) to the private sector (including a small portion of government borrowing for its commodity operations) increased by over Rs 63 billion in the four weeks ended as on that date.
Net bank advances to private sector should actually be higher than the figure given in the provisional balance sheet for 10th December, 2005 as government borrowing for commodity operations has been showing credit retirement for the last many weeks and the retirement might have persisted during the period under report.
Such retirement was of the order of Rs 15.6 billion four weeks back on November 12. Earlier on, banking system's overall credit to the private sector rose by Rs 120 billion during FY06 to November 12, 2005 according to the monetary and credit profiling released by the SBP on November 24.
Investment in government and other securities, both by the central bank and the scheduled banks, which largely reflect the level of government borrowing from the banking system for budgetary support, increased by Rs 34 billion (Rs 68 billion accounted for by the SBP and minus Rs 34 billion by the scheduled banks) during the last four weeks.
When adjusted for the position of government deposits with the State Bank, net borrowing for budgetary support comes to about Rs 38 billion as deposits of both Federal and Provincial governments with the central bank declined by about Rs 4 billion. Position of government deposits with the scheduled banks for any further upward or downward adjustment was not available.
If the head 'Deposits and other accounts' appearing in the provisional balance sheets of scheduled banks is taken as a proxy for deposit money, the outstanding level of deposit money appears to have increased by Rs 89 billion during the last four weeks ended on December 10, 2005.
The actual figure may, however, turn out to quite low or still in the negative range as it had been for the last many weeks. Currency in circulation has already increased by about Rs 39 billion during the four week period ended on December 10, 2005.
While net foreign assets (NFA) of scheduled banks cannot be calculated from their existing format of reporting, accounts of the State Bank showed that its net foreign assets declined by about Rs 11 billion during the last four weeks. This was in line with the trend followed by the liquid foreign exchange reserves which declined to 11,321 million dollar on December 10 compared with 11,544.6 million dollar on November 12 - a decline of about 224 million dollar during the last four weeks. The decline was shared by both the State Bank as well as the scheduled banks.
Compared with rupee-dollar parity obtaining on November 12 2005, the parity showed deterioration favouring the dollar during the last four weeks ended on December 10, 2005. A rise in demand for dollars at the close of the year and usual debt payments around this time of the year kept the domestic currency under pressure. In the interbank market, the rupee was traded at Rs 59.78 and Rs 59.79 per dollar for buying and selling, respectively, on December 10 compared Rs 59.75 and Rs 59.77 on November 12.
Likewise, in the open market, the rupee was exchanged with the United States Currency at Rs 60.05 and Rs 60.10 per dollar on December 10 compared with Rs 59.75 and Rs 59.85, respectively, on November 12th.
The rupee also deteriorated versus the Euro during this period; it was traded at Rs 70.50 and Rs 70.60 for buying and selling, respectively, on December 10 compared with November 12 closings of Rs 69.65 and Rs 69.75. The present trend in the parity may persist in the coming weeks due to more year-end debt payments and the usual more than normal demand for dollars during the ensuing Haj months.
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