The documented currency in circulation (CiC) has decreased to Rs. 8.7 trillion in Pakistan, representing a big drop of Rs. 475 billion in informal cash holdings and the use of cash to do business since its peak of Rs. 9.1 trillion on June 30, 2023.
As of December 2023, the CiC as a percentage of the overall money supply (M2), has declined from 29 percent to 27 percent, Topline Securities said in a brief market review on Monday. The CiC may also include cash with banks, checking deposits, and other types of deposits that are readily convertible to cash.
Currency in Circulation (CIC) has declined from its peak of Rs9.1trn on Jun 30, 2023, to Rs8.7trn by Dec 2023. Additionally, CIC as a % of M2 has also declined from 29% to 27% during the same period. pic.twitter.com/DY8yVxmrYo
— Topline Securities (@toplinesec) December 25, 2023
Historically, the CiC/M2 ratio averaged ~22 percent between FY06-15, then jumped to 26 percent in FY16 and then 29 percent in FY23.
Since June 2023, the real estate market has taken some big punches, and file sellers have gone underground with buyers unwilling to meet their prices. The past few months have seen more activity in gold, currencies (mostly rupee/$), and commodities.
Last year’s remarkable spike in commodity prices – such as sugar, wheat, and urea – drew huge deposits at banks this time, which has helped divert the informal cashflow towards the documented channel.
My boss bought 5 marla house for 12 million which was listed by dealer at 16 million. Dealers mafia are the biggest culprits.
Reduction in currency in circulation means lower inflation. But when did inflation to drop?