Forex reserves rise to record $17.44 billion

Rupee weakens, overnight rates up.

KARACHI: Foreign exchange reserves rose to a record $17.44 billion in the week ended February 12, up from $17.31 billion the previous week, the central bank said on Thursday.

Reserves held by the State Bank of Pakistan (SBP) rose to $13.91 billion from $13.76 billion, while those held by commercial banks fell to $3.53 billion from $3.55 billion, said Syed Wasimuddin, chief spokesman for the central bank.

“Foreign exchange reserves rose to a record because of a rise in remittances and increasing exports,” added Wasimuddin.

In the currency market, the rupee weakened on Thursday amid higher dollar demand from importers because of rising international oil prices, but dealers said the rupee is expected to move in a narrow band in the short term.

The rupee closed at 85.45/50 to the dollar, down from Tuesday’s close of 85.25/30. It closed at 84.78/83 to the dollar on Friday, the highest close since May 25, 2010.

Officials and dealers said a record inflow of remittances, strong foreign exchange reserves, healthy exports and a current account surplus were behind the rupee’s gain in value in recent days.

Remittances were recorded at $6.12 billion during the first seven months of fiscal year 2010-11, up 17.7 per cent from the same period last year, according to data from SBP.

In the money market, overnight rates closed at its top level of 13.90 per cent, compared with Tuesday’s close of 11 per cent amid tight liquidity after scheduled outflows of Rs27.3 billion ($319 million). Dealers said there were scheduled outflows amounting to Rs22 billion on Friday.

Published in The Express Tribune, February 18^th, 2011.