Currency in circulation falls by Rs90bn in a week

February 06, 2024 (MLN): The currency in circulation within the economy till January 26, 2024 has fallen by Rs89.96bn WoW to Rs8.51 trillion, according to provisional accounts on Monetary Aggregates for the week, maintained by the State Bank of Pakistan (SBP).

While in the current fiscal year, the currency in circulation has decreased by Rs634.67bn as compared to Rs9.15tr recorded at the end of June 2023.

Broad money (M2), the most widely used measure of money supply in Pakistan, dropped by Rs23.04bn WoW to Rs31.92tr as of January 26, 2024.

When compared to June 2023, M2 has risen by Rs401.15bn, compared to Rs31.52tr recorded by the end of the last fiscal year.

Currency in circulation as a percentage of M2 stood at 26.67% compared to 26.93% a week before and 29.02% on June 2023.

Total deposits held with banks were recorded at Rs23.3tr, depicting an increase of Rs65.04bn WoW and an increase of Rs1.03tr FYTD.

To note, the deposits held with banks exclude inter-bank deposits, deposits of governments, and foreign constituents.

The currency in circulation represents the balance of banknotes and coins in circulation, held by the general public and financial institutions.

In Pakistan, M2 is the most widely used definition of broad money.

From liability side, it is measured as a sum of currency in circulation; total deposits of non-government sector, including residents’ foreign currency deposits; and other deposits with SBP.

And from asset side, M2 is a sum of net domestic assets and net foreign assets of the banking system (i.e. SBP and scheduled banks).

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