Selling of dollars by many cash-starved banks to generate liquidity has mounted pressure on the rupee against the greenback, according to industry sources.
On the other hand, the government yesterday announced to raise Rs775 billion through Treasury Bills and Rs150bn through Pakistan Investment Bonds (PIBs) in the next three months (December to February).
Money market dealers said the market is short of around Rs200bn. If the government keeps pressure on the banking industry for its borrowing, the situation could be aggravated. The government has so far been borrowing solely from scheduled banks.
According to new borrowing calendar issued, the government plans to raise an additional Rs272bn (total Rs775bn) through T-bills as their maturity during the next three months will be around Rs502bn.
This shortage has been causing damage to the private sector borrowing. The economy would also suffer due to extremely low supply of liquidity as visible through year-on-year monetary expansion of just 0.03 per cent during the last five months.
