Karachi, JS Securities Limited's recent research reveals that following an 11% QoQ surge in 2QCY23, marking the highest in 23 quarters, the currency in circulation (CIC) encountered a pronounced 9% QoQ decline in 3QCY23. Such a drastic decline has been unprecedented for decades.

Simultaneously, deposit gathering within the broad money supply (M2) persisted. This activity did not result in expanding the overall broad money supply, leading to a 1% QoQ decrease in M2 during 3QCY23.

Factors like a heightened savings rate, crackdowns on multiple economic segments, and stability in PKR might have influenced this shift from liquid cash to deposits. Segment-wise analysis showed significant deposit growth in 3QCY23 primarily from Personal, Power, NBFIs, and NFPSEs sectors.

Currency in Circulation Sees Record 9% Quarterly Drop

The latest data from JS Securities Limited indicates that the stock of Currency in Circulation (CIC) showcased a remarkable trajectory recently. Following an 11% QoQ rise in 2QCY23, the most significant in over 23 quarters, CIC in 3QCY23 recorded an unprecedented 9% QoQ decline, a magnitude not seen for many decades.

Deposit mobilization, when looking at broad money supply (M2), persisted through the same period, displaying a 2% QoQ uptick in 3QCY23 after its 9% QoQ jump in the preceding quarter. Nevertheless, this did not lead to a similar trajectory for the total M2 stock, which reported a 1% QoQ decline in 3QCY23.

Several factors, such as the higher savings rate, initiatives against various economic segments, and the relative stability of the PKR, could have influenced this movement from cash to deposits. Segment-wise deposit data indicates the Power sector and the personal segment, comprising salaried, self-employed, and other personal deposits, as significant contributors to the growth in deposits during this quarter.