Pakistani currency in circulation increases by Rs553 billion

ISLAMABAD: Broad money (M2), the most comprehensive measure of money supply in Pakistan, increased by Rs553.17 billion week-on-week (WoW) to reach Rs35.1 trillion as of June 14, 2024, according to provisional data on Monetary Aggregates released by the State Bank of Pakistan (SBP).

This marks a substantial rise of Rs3.58 trillion from the end of the last fiscal year, when M2 stood at Rs31.52 trillion.

As of June 14, 2024, currency in circulation surged by Rs262.64 billion WoW, reaching Rs9.3 trillion. During the current fiscal year, the currency in circulation increased by Rs151.9 billion, up from Rs9.15 trillion at the end of June 2023. As a percentage of M2, currency in circulation rose to 26.5 per cent, compared to 26.16 per cent a week earlier and 29.02 per cent in June 2023.

Total deposits held with banks were recorded at Rs25.67 trillion, reflecting an increase of Rs289.19 billion WoW and a rise of Rs3.4 trillion for the fiscal year to date (FYTD). It is important to note that these figures exclude inter-bank deposits, government deposits, and foreign constituents’ deposits.

M2 is a widely recognised measure of broad money in Pakistan, comprising several components. From the liability side, M2 includes currency in circulation, total deposits of the non-government sector (including residents’ foreign currency deposits), and other deposits with the SBP.

On the asset side, M2 is the sum of net domestic assets and net foreign assets of the banking system, encompassing both the SBP and scheduled banks.

Currency in circulation, representing banknotes and coins held by the public and financial institutions, is a critical component of M2. The recent increases in both currency in circulation and total deposits indicate robust growth in the country’s money supply, reflecting underlying economic activities and financial health.

The SBP’s data highlights the dynamic nature of Pakistan’s monetary aggregates, which serve as essential indicators for policymakers and analysts monitoring the economic landscape.

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