Pakistan’s broad money supply declines by over Rs140 billion

WEB DESK: As of July 26, 2024, Pakistan’s broad money (M2), a key indicator of money supply, fell by Rs140.43 billion week-on-week, reaching Rs35.15 trillion, according to the latest provisional data from the State Bank of Pakistan (SBP).

This decline follows a decrease of Rs1.41 trillion from June 2024, when M2 was recorded at Rs36.56 trillion.

The reduction in M2 is largely attributed to a drop in currency in circulation. As of July 26, currency in circulation had decreased by Rs158.06 billion week-on-week, totalling Rs9.07 trillion.

Compared to June 2024, this marks a decline of Rs83.01 billion from the Rs9.15 trillion recorded at the end of the last fiscal year.

The currency in circulation now represents 25.81 per cent of M2, a slight decrease from 26.15 per cent the previous week and 25.04 per cent in June 2024.

Total deposits with banks stood at Rs25.93 trillion, reflecting a week-on-week increase of Rs18.1 billion, but a year-to-date decrease of Rs1.31 trillion. It is important to note that this figure excludes inter-bank deposits, government deposits, and foreign constituents.

In Pakistan, M2 is widely used to gauge the overall money supply. On the liability side, M2 includes currency in circulation, total deposits of the non-government sector (including residents’ foreign currency deposits), and other deposits held with the SBP.

On the asset side, M2 encompasses net domestic assets and net foreign assets of the banking system, including both the SBP and scheduled banks.

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