Foreign exchange: SBP reserves hit eight-month high at $9.11b

Central bank says its reserves have increased $1.8b this fiscal year

KARACHI: The foreign exchange reserves held by the central bank surged 5% on a weekly basis, hitting an eight-month high, 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 November 29, the foreign currency reserves held by the SBP were recorded at $9,112.9 million, up $430.6 million compared with $8,682.3 million in the previous week. According to SBP data, such levels were last seen on April 26, 2019.

"In this fiscal year, the SBP reserves have increased by $1.8 billion," stated the central bank.

"Foreign exchange swaps/forward liabilities have decreased by $1.95 billion between June and October 2019. Increase in the liquid SBP reserves and reduction in the swaps/forward liabilities reflects the build-up of foreign exchange buffers," it added.

Overall, liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $15,993.2 million. Net reserves held by banks amounted to $6,880.3 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.