"...Effective from 12th July 1999, every scheduled bank shall maintain with State Bank an average weekly balance equivalent to 5.0 percent of its demand and time liabilities," the State Bank of Pakistan said in a circular. The central bank cut the reserve requirement to 3.5 per cent on May 19 when it unified a dual rate exchange mechanism. It has also lowered other reserve requirements to pump liquidity into the system, anticipating a large withdrawal from frozen foreign currency accounts after it allowed conversion at the interbank floating rate.

Withdrawal from these accounts, frozen hours after Pakistan's nuclear tests in May last year, was earlier allowed at the official rate of 46 Rupees to a dollar. The rate was abolished in May in favour of a floating interbank rate, currently around 51.40 Rupees.