Pakistan’s broad money (M2) supply rose to Rs41.63 trillion, registering a week-on-week increase of Rs346 billion. On a fiscal year-to-date basis, M2 has expanded by Rs838 billion, while the calendar year-to-date growth stands at Rs346 billion.

On an annual basis, the broad money recorded a substantial rise of Rs6.01 trillion, supported by higher deposit mobilisation and balance-sheet expansion within the banking sector, according to data compiled by Optimus Capital Management.

A closer look at the composition of money supply shows that total bank deposits climbed to Rs30.66 trillion, increasing by Rs367 billion during the week and by Rs4.22 trillion compared to the same period of last year.

In contrast, the currency in circulation declined by Rs27 billion on a weekly basis to Rs10.92 trillion, suggesting a partial shift away from cash holdings. Consequently, the currency in circulation as a share of M2 eased to 26.2%, down 0.3 percentage point week-on-week, although it remains 0.6 percentage point higher year on year.

On the asset side, net foreign assets (NFA) of the banking system improved by Rs102 billion during the week under review to Rs880 billion, contributing positively to the overall monetary expansion. Net domestic assets (NDA) rose by Rs243 billion to Rs40.75 trillion, mainly driven by strong private sector credit growth.

Credit to the private sector increased sharply by Rs412 billion during the week, taking total outstanding credit to Rs10.76 trillion. Islamic banking continued to lead incremental credit growth, while conventional banks recorded a moderate expansion.

In contrast, the net federal government borrowing dipped by Rs66 billion on a weekly basis to Rs37.16 trillion, indicating some fiscal restraint or a greater reliance on non-bank sources of financing.

Moreover, the State Bank of Pakistan (SBP) conducted an auction of Pakistan Investment Bonds (PIBs – Fixed Rate) on Wednesday. The auction, which offered two-year (zero-coupon), three-year, five-year, 10-year and 15-year tenors, attracted total bids of Rs2.06 trillion. The central bank accepted Rs450 billion through competitive bids, with total acceptance rising to Rs546.3 billion after including non-competitive bids and short selling.

Furthermore, the Pakistani rupee appreciated by three paisa against the US dollar in inter-bank trading and closed at Rs279.97 compared to the previous day’s close at Rs280.

Gold prices recorded a sharp increase in the local market as the price of 24-karat gold per tola surged by Rs4,300 to settle at a record high of Rs486,162. The price of 10 grams of 24-karat gold increased by Rs3,687 to Rs416,805, according to the All Pakistan Sarafa Gems and Jewellers Association.