Foreign exchange: SBP reserves inch up $22m to $7.9b

Central bank cites no reason for improvement

KARACHI: The foreign exchange reserves held by the central bank increased 0.27% on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.

Earlier, the reserves had spiralled downwards, falling below the $7-billion mark, which raised concern over Pakistan's ability to meet its financing requirements. However, financial assistance from the United Arab Emirates (UAE), Saudi Arabia and other friendly nations helped shore up the foreign exchange reserves.

On October 25, the foreign currency reserves held by the SBP were recorded at $7,914.3 million, up $21.6 million compared with $7,892.7 million in the previous week. The report cited no reason for the increase in reserves, which stood below the $8-billion mark.

Overall, liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $15,089.7 million. Net reserves held by banks amounted to $7,175.4 million.

Pakistan received the first loan tranche of $991.4 million from the International Monetary Fund (IMF) on July 9, which helped bolster the reserves. Previously, the reserves had jumped on account of $2.5 billion in inflows from China.

Over time, the declining reserves have forced the central bank to let the rupee depreciate massively, sparking concern about the country's ability to finance a hefty import bill as well as meet debt obligations in coming months.

In April last year, the SBP's reserves increased $593 million due to official inflows. A few months ago, the 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) earlier.

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