KARACHI: The State Bank of Pakistan (SBP) has altered its monetary policy announcement date, advancing it to November 19, 2021, from the initially scheduled date of November 26, 2021.
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KIBOR rates on November 16, 2021
KARACHI: State Bank of Pakistan (SBP) on Tuesday issued the following Karachi Interbank Offered Rates (KIBOR) on November 16, 2021.
Tenor BID OFFER 1 – Week 7.29 7.79 2 – Week 7.35 7.85 1 – Month 7.45 7.95 3 – Month 8.44 8.69 6 – Month 8.75 9.00 9 – Month 9.09 9.59 1 – Year 9.29 9.79 -
SBP issues customers exchange rates for November 16
KARACHI: The State Bank of Pakistan (SBP) on Tuesday issued customers’ exchange rates for November 16, 2021. The exchange rate is on the basis of weighted average rates of commercial banks.
The SBP said the data is compiled and disseminated for information only. These exchange rates are estimates that quoted by various commercial banks to their clients.
The banks provide their indicative exchange rates for commercial transactions with customers.
CURRENCY BUYING SELLING AED 47.7447 47.8552 AUD 128.7213 129.0182 CAD 140.0288 140.3456 CHF 189.5190 189.9612 CNY 27.5253 27.5852 EUR 199.4481 199.9138 GBP 235.2572 235.8058 JPY 1.5349 1.5385 SAR 46.7296 46.8371 USD 175.2413 175.6641 -
SBP launches digital approval system for banks
KARACHI: The State Bank of Pakistan (SBP) on Monday launched an end-to-end digital regulatory approval process known as the Regulatory Approval System (RAS).
The central bank now achieved another milestone by launching a module pertaining to banking policy and regulations.
With the launch of this module in RAS, banks, Development Finance Institutions (DFIs) and Microfinance Banks (MFBs) can now submit their request letters/ proposals on a dedicated online portal to SBP’s Banking Policy and Regulations Department whereby SBP, after digitally processing them, would also be in a position to disseminate the regulatory decisions to them through the same portal.
Earlier in October 2020, Governor SBP Dr. Reza Baqir had launched the SBP FX RAS for end-to-end digitization of Foreign Exchange (FX) related case submission process.
The system turned out to be a huge success as it enabled the customers to lodge their FX-related requests from the location of their convenience thereby sparing their valuable time previously spent in navigating the paper-based processes. It also enabled banks to submit FX-related cases electronically for regulatory approval of SBP and SBP-Banking Services Corporation (BSC).
Implementation of RAS for Banking Policy and Regulation-related issues will be effective from November 24, 2021. It will enable banks, DFIs and MFBs to digitally submit their requests and receive regulatory decisions through a single window. Nevertheless, in addition to online submission, banks, DFIs and MFBs shall also continue with the manual submission of their cases that will cease after a brief transitory period till December 31, 2021.
Implementation of SBP’s RAS is expected to conserve precious resources, contribute towards SBP’s Green Banking initiative and bring efficiency in the communication between the banking sector and SBP. Moreover, this arrangement will also replace paper-based submissions that are prone to logistic and storage issues, and cause inadvertent and unnecessary delays for relevant stakeholders.
RAS is a regulatory initiative under SBP’s Vision 2020 aiming at the digital flow of information amongst the stakeholders to improve the service standards through leveraging upon digital techniques.
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KIBOR rates on November 15, 2021
The State Bank of Pakistan (SBP) has unveiled the latest Karachi Interbank Offered Rates (KIBOR) on November 15, 2021, providing insights into the prevailing interest rates in the interbank market.
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SBP issues customers exchange rates for November 15
KARACHI: The State Bank of Pakistan (SBP) on Monday issued customers’ exchange rates for November 15, 2021. The exchange rate is on the basis of weighted average rates of commercial banks.
The SBP said the data is compiled and disseminated for information only. These exchange rates are estimates that quoted by various commercial banks to their clients.
The banks provide their indicative exchange rates for commercial transactions with customers.
CURRENCY BUYING SELLING AED 47.5130 47.6235 AUD 128.1104 128.4043 CAD 139.1548 139.4776 CHF 189.6286 190.0729 CNY 27.3643 27.4243 EUR 199.8401 200.3160 GBP 234.2561 234.8049 JPY 1.5315 1.5353 SAR 46.5038 46.6113 USD 174.3909 174.8137 -
SBP CRR decision to control overheating in economy
KARACHI: Analysts are surprised over the sudden move of the State Bank of Pakistan (SBP) for revising Cash Reserve Requirement (CRR) and they termed the measures to control overheating in the economy.
Analysts at Topline Securities said that in a sudden move, Pakistan Central Bank, SBP raised the Cash Reserve Requirement (CRR) by 1 per cent for banks.
This monetary tool is not frequently used in Pakistan as SBP frequently uses its Policy Rate to tighten or loosen monetary policy.
According to a press release issued by SBP on Saturday (November 13, 2021), average CRR to be maintained during a period of two weeks by scheduled banks, has been increased from 5 per cent to 6 per cent and minimum CRR to be maintained each day from 3 per cent to 4 per cent.
CRR is the amount of money that banks are required to keep with SBP and is applicable on demand and time liabilities (DTL) of less than a year. According to SBP data as of Jun 30, 2021, Pakistan DTL of less than one year is close to Rs17 trillion.
This 1 per cent rise will affect liquidity of banks by Rs150 to 170 billion as CRR requirement was estimated at around Rs890 billion.
After this move by SBP, CRR requirement will increase to over Rs1 trillion. We believe this is another tool used by SBP to tighten the monetary policy to control aggregate demand.
Earlier on September 20, 2021 SBP raised the policy rate by 25bps to 7.25 per cent. Since then yields in secondary markets are up by 126bps as yields on 6month T-Bill and 3-Year PIBs have increased to 8.9 per cent & 10.3 per cent, respectively. This is indicating that markets are expecting further rise in policy rate in November end Monetary Policy meeting.
According to SBP, this has been done to moderate money supply growth and domestic demand. This will help sustain current economic recovery, achieve the government’s medium-term inflation target, and reduce pressures on PKR as per SBP.
Just to recall money supply in Pakistan has grown by 16 per cent on average in 2021 to date. This is higher than last 8-year average M2 growth of 13-14 per cent.
Above-average M2 growth is led by increased government borrowing from banks, rising private sector credit and increasing remittances. This will also result in lower aggregate demand and help in controlling imports and current account deficit.
The SBP has already taken several measures to address concerns on rising external account concerns and increasing aggregate demand. This include measures to curb undesirable foreign currency outflow, 100 per cent cash margin requirement on import of certain products and stringent regulations on auto financing.
The SBP is hopeful that banks will also offer better returns to depositors in order to increase deposit mobilization to cater to increased liquidity requirements. “We are of the view that this measure may slowdown loan growth and banks may not opt for aggressive deposit mobilization at the expense of higher deposit rates,” the analysts said.
After this 1 per cent additional CRR, banks will either reduce their investment or/and reduce lending or will use the Open Market Window Operation (OMO). To recall, SBP and government were also promoting lending by Banks as SBP had given a target to banks to lend at least 5 per cent of their private sector lending for housing by Dec 2021. Government had also introduced increased taxation for banks falling below a 50 per cent advance to deposit ratio (ADR).
After this measure it will be interesting to see the participation and result of upcoming T-Bill auction scheduled on 17th November, 2021. We expect less participation of banks and participation at higher rates.
Local banks profits will also be affected due to this measure. As mentioned earlier 1 per cent increase in CRR will result in Rs170 billion of liquidity going to SBP. This Rs170 billion if invested in T-bill could have yielded Rs10 billion in after tax profits. Thus, after-tax profits of banks will be affected by ~4 per cent as we expect Banks in Pakistan will make net profit of R275 billion to Rs290 billion in 2021. However, further tightening means that local interest rate may increase more than our expectations. If that happens then banks’ earnings going forward will be much higher than our initial expectations.
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Dollar falls to Rs174.73 at interbank opening
KARACHI: The dollar declined by Re1 against the Pak Rupee (PKR) at the opening in the interbank foreign exchange market on Monday. The dollar is being traded at Rs174.73 at the time of reporting this news article.
The foreign currency made a non-stop gain during the last week. This gain resulted in a fall in rupee value to the record low of Rs175.73 on November 12, 2021, in the interbank foreign exchange market.
Market experts said that the latest recovery in the rupee was due to measures taken by the State Bank of Pakistan (SBP) a day earlier.
The SBP on Sunday, November 14, 2021, decided to increase the average Cash Reserve Requirement (CRR), to be maintained during a period of two weeks by scheduled banks, from 5 percent to 6 percent and minimum CRR to be maintained each day from 3 percent to 4 percent.
CRR is the amount of money that banks are required to keep with the State Bank of Pakistan and is applicable on demand liabilities and time liabilities with tenor of less than a year.
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Pakistani workers send $2.52 billion in October 2021
KARACHI: Pakistani workers living abroad have sent $2.52 billion as remittances to their homeland in the month of October 2021, State Bank of Pakistan (SBP) said on Sunday.
The SBP said that the workers’ remittances continued their strong streak as inflows recorded $2.5 billion in October 2021, up 10.2 percent (y/y) and only marginally lower compared to last month (5.7 percent).
In addition to remaining above $2 billion since June 2020, this is the eighth consecutive month when remittances have been close to or above $2.5 billion.
On a cumulative basis, remittances have risen to $10.6 billion during the first four months of FY22 (July-October 2021), which is 11.9% higher than the same period last year.
Remittance inflows during the first four months of FY22 have mainly been sourced from Saudi Arabia ($ 2.7 billion), UAE ($ 2.0 billion), UK ($ 1.5 billion) and USA ($ 1.1 billion).
Proactive policy measures by the Government and SBP to incentivize the use of formal channels and altruistic transfers to Pakistan amid the pandemic have positively contributed towards the sustained improvement in remittance inflows since last year.
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State Bank enhances CRR 6% to ease pressure on PKR
KARACHI: State Bank of Pakistan (SBP) on Saturday enhanced the cash reserves requirement (CRR) for banks to 6 per cent in order to ease pressure on Pak Rupee (PKR).
The SBP decided to increase the average (CRR), to be maintained during a period of two weeks by scheduled banks, from 5 percent to 6 percent and minimum CRR to be maintained each day from 3 percent to 4 percent.
CRR is the amount of money that banks are required to keep with State Bank of Pakistan and is applicable on demand liabilities and time liabilities with tenor of less than a year.
Time liabilities with tenor of more than one year shall continue to be exempted from maintenance of cash reserves.
With the economy recovering briskly from last year’s acute Covid shock, there is a need to gradually normalize policy settings, including the growth of monetary aggregates.
In recent months, real money supply growth has drifted above its trend. Today’s measure will moderate this growth as well as domestic demand, thereby helping to sustain the current economic recovery, achieve the government’s medium-term inflation target, and reduce pressures on the Pak Rupee (PKR).
In addition, this measure is likely to have positive impact on deposit mobilization as the banks would be encouraged to generate more deposits to cope with additional liquidity requirements for their operations.
This would incentivize banks to offer better returns on deposits to attract these funds; thus serving the SBP objective of encouraging savings.
It may also be highlighted that waiver of CRR on Time liabilities with tenor more than a year will encourage banks to raise more long-term deposits, which will facilitate asset-liability matching and enable banks to extend long term loans for construction and housing financing.