LINKAGES BETWEEN FOREIGN EXCHANGE AND MONEY MARKETS By Muhammad Arif Senior Joint Director FSCD
PRESENTATION LAYOUT n n n n n CENTRAL BANK OBJECTIVES CENTRAL BANK INTERVENTION STERILIZED INTERVENTION UNSTERILIZED INTERVENTION IMPACT THROUGH SBP BALANCE SHEET BRIEF VISIT TO NDA AND NFA IMPACT ON NET DOMESTIC ASSETS IMPACT ON NET FOREIGN ASSETS CASE STUDIES SBP’S SWAP DESK
CENTRAL BANK OBJECTIVES n n n EXCHANGE RATE STABILITY RIGHT QUANTITY OF MONEY SUPPLY INTEREST RATE STABILITY INFLATION MANAGEMENT MACRO ECONOMIC BALANCE
CENTRAL BANK INTERVENTION n n n INTERVENTION IS SALE & PURCHASE OF FOREIGN CURRENCY FOR A VARIETY OF REASONS LIKE ALTER MONEY SUPPLY IMPACT THE INTEREST RATE SITUATION STABILISE EXCHANGE RATE RESERVE BUILDING TO MEET NDA AND NFA TARGETS
TYPES OF INTERVENTION n STERILISED n UNSTERILISED
UNSTERILIZED INTERVENTION n n n IF THE IMPACT ON MONEY SUPPLY IS NOT NEUTRALIZED THAN INTERVENTION IS CALLED UNSTERILIZED THE CHANGE IN MONEY SUPPLY WILL HAVE AN IMPACT ON INTEREST RATES, INFLATION LEVEL AND EXCHANGE RATE THIS TYPE OF INTERVENTION WILL EFFECT BOTH FX AND MM MARKETS
STERILIZED INTERVENTION n n n IMPACT ON MONEY SUPPLY IS NEUTRALIZED BY OMO's OR SWAP DESK THE UNCHANGED MONEY SUPPLY WILL CAUSE OTHER VARIABLES TO REMAIN UNCHANGED THE IMPACT WILL BE RESTRICTED TO EXCHANGE MARKET ONLY
IMPACT THROUGH SBP BALANCE SHEET NDA + NFA = C + DD + TD = HPM WHERE n NFA = F. A. – F. L. n F. A. INCLUDE GOLD, SDRs, FX RESERVES, DEPOs WITH OTHER C. Bs. & UNCLASSIFIED ITEMS n F. L. INCLUDE DEPOSIT OF OTHER C. Bs, SWAP FUNDS, IMF FACILITY***, UNCLASSIFIED ITEMS CONTD.
IMPACT THROUGH SBP BALANCE SHEET n n n NDA = D. A. – D. L. D. A. INCLUDE CLAIMS ON GOVT. , CLAIMS ON PVT SECTOR, CLAIMS ON SCHEDULED BANKS, OTHER ITEMS NET D. L. INCLUDE GOVT DEPO WITH C. B. OR NDA = NCG (Net claims on Gov)+ CPS (claims on private sector) + CSB (claims on Scheduled banks) + OIN (other item net) OIN INCLUDE CAPITAL ACCOUNT, PROFIT & LOSS ACCOUNT, SBP PROPERTY ETC
IMPACT THROUGH SBP BALANCE SHEET ASSETS = LIABILITY + EQUITY SINCE OIN INCLUDES CAPITAL OF SBP THEREFORE, NFA + (NCG+CPS+CSB+OIN) =LIABILITIES = HPM
CASE STUDIES CASE 1 n n n SBP TRANSFER Rs 1 BILLION PROFIT TO GOVT. OIN WILL GO UP NET CLAIM ON GOVT GO DOWN NDA REMAIN UNCHANGED NFA & HPM UNAFFECTED GOVT. ’S BUDGETARY POSITION IMPROVE
CASE STUDIES CASE 2 n n SBP BUY $ 1, 000 FROM INTERBANK MARKET ATR 59. 00 NFA UP BY $1=Rs 59 MIO NDA REMAIN UNCHANGED HPM GO UP Rs 59, 000
CASE STUDIES CASE 3 n n SBP BUY $1 MIO FROM KERB ATR Rs 60 WHEN INTERBANK RATE IS STILL 59 NFA UP BY Rs 59 NDA UP BY Rs 1 through OIN Hpm up by Rs 60
CASE STUDIES CASE 4 n n n LOAN FROM WORLD BANK GOVT’s LIABILITY NOT SBP’s NFA UP BY LOAN AMOUNT NDA UNCHANGED HPM UP
CASE STUDIES CASE 5 n n n LOAN FROM IMF SBP LIABILITY NFA UNCHANGED NDA UNCHANGED HPM UNCHANGED
SBP SWAP DESK SBP’S SWAP DESK OPERATION n TO MANAGE RUPEE LIQUIDITY AS SUBSTITUTE TO OMO TO MANAGE RESERVE POSITION n TO MANAGE FUTURE RECEIPTS & PAYMENTS n TO MANAGE FORWARD PRICES n n
THANK YOU
Скачать презентацию LINKAGES BETWEEN FOREIGN EXCHANGE AND MONEY MARKETS By
8368ac6b8a18a5361bc46d951332c38c.ppt