Currency in circulation jumps 28%

Gold stable; jewellers demand independent regulator after talks fail

KARACHI:

Pakistan's broad money supply (M2) recorded a strong 21.3% year-on-year (YoY) growth as of March 27, 2026, reflecting a significant expansion in liquidity driven by rising deposits and increased currency circulation in the economy.

The latest data shows that total bank deposits grew by 18.7% YoY to Rs30.6 trillion, indicating sustained inflows into the formal banking system despite economic pressure. Meanwhile, currency in circulation surged by 28.4% YoY to Rs12.07 trillion, which highlighted consistent cash demand in the economy.

The sharp rise in money supply underscores expanding economic activity but also raises concerns about inflationary pressure as higher liquidity continues to circulate in the system.

At the close of trading on Monday, the Pakistani rupee posted a marginal appreciation of 0.01% against the US dollar, settling at 279.07. The currency has strengthened by 0.38% in the calendar year to date (CYTD) and 1.68% in the fiscal year to date (FYTD), indicating relative stability in the exchange rate, according to Ismail Iqbal Securities.

Moreover, gold prices in Pakistan moved higher on Monday, tracking gains in the international market, where investors remained cautious amid ongoing developments in the US-Iran situation and its potential impact on global interest rates.

In the local market, the price of gold per tola increased by Rs1,100 to reach Rs491,462. Similarly, the rate for 10 grams of gold rose by Rs943 to Rs421,349, according to data released by the All-Pakistan Gems and Jewellers Sarafa Association. In contrast, silver prices recorded a decline, falling by Rs50 to settle at Rs7,744 per tola. In the international market, spot gold remained largely steady at $4,669.13 per ounce as of 1326 GMT, after briefly dropping 1% earlier in the session. Meanwhile, US gold futures edged up by 0.3% to $4,694.20 per ounce.

Market sentiment remained cautious as the United States and Iran continued to assess a potential ceasefire plan, while investors also awaited key economic indicators. Minutes from the Federal Reserve meeting are scheduled to be released on Wednesday, with US PCE and CPI inflation data due later this week, which could provide further direction on interest rates and gold prices.

Meanwhile, President of the All-Pakistan Gems and Jewellers Sarafa Association, Muhammad Qasim Shikarpuri, called on the government to establish an independent regulatory body for the gold sector following failure of talks with the FBR.

Addressing concerns of jewellers, Shikarpuri said the current enforcement approach has created uncertainty and fear within the market. He urged authorities to stop harassment of traders, warning that excessive pressure could force many jewellers to shut down their businesses.

He specifically criticised the use of Section 175, alleging that it is being misused to carry out intrusive inspections. "Illegal checking in the name of law must be stopped," he said, adding that jewellers are being unfairly targeted.