Foreign exchange: SBP's reserves drop by another $53m, stand at $9.01b

Published: July 26, 2018
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Central banks cites payments on account of external debt servicing as reasons for decline. PHOTO AFP

Central banks cites payments on account of external debt servicing as reasons for decline. PHOTO AFP

KARACHI: In a worrying development for Pakistan, foreign exchange reserves held by the central bank plunged another 0.58% on a weekly basis, according to data released on Thursday.

The alarmingly low level, which has already forced the State Bank of Pakistan’s (SBP) hand at letting the rupee go on four separate occasions since December 2017, raises concerns over the country’s ability to finance a hefty import bill and meet debt obligations in coming months.

On July 20, foreign currency reserves held by SBP were recorded at $9,010.7 million, down $52.9 million compared with $9,063.6 million in the previous week.

The reason for the decline was attributed to payments on account of external debt servicing.

Overall, liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, stood at $15,728.8 million. Net reserves held by banks amounted to $ 6,718.1 million.

Foreign exchange: SBP’s reserves rise 1.31% to $9.79b

In April, the SBP’s reserves increased $593 million due to official inflows. Pakistan also raised $2.5 billion in November 2017 by floating dollar-denominated bonds in the international market in a bid to shore up official reserves.

A few months ago, the foreign currency reserves surged due to official inflows including $622 million from the Asian Development Bank (ADB) and $106 million from the World Bank. The SBP also received $350 million under the Coalition Support Fund (CSF).

In January, the SBP made a $500-million loan repayment to the State Administration of Foreign Exchange (SAFE), China.

The low level of reserves has already put severe pressure on the Pakistani rupee that has witnessed four rounds of devaluation, cumulatively shedding close to 22% to the US dollar since December. With reserves now falling further and an import bill hovering around $6 billion a month, concerns have increased over an imminent balance of payments crisis.

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Reader Comments (2)

  • Nash Majainah
    Jul 26, 2018 - 10:14PM

    Just wait for _Imdan Khan to settle down and then see the action.Recommend

  • BrainBro
    Jul 27, 2018 - 2:17AM

    KPK has already become a Switzerland. Only a matter of time rest of Pakistan becomes the same.Recommend

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