Foreign exchange: SBP reserves fall $804m to $11.2b

Decline comes due to external debt and other official payments

KARACHI: The foreign exchange reserves held by the central bank decreased 6.7% on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.

On March 27, the foreign currency reserves held by the SBP were recorded at $11,185.6 million, down $804 million compared with $11,989.2 million in the previous week.

According to the central bank, the decline was primarily due to government’s external debt payments that amounted to $441 million, and other official payments.

Overall, liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $17,387.5 million. Net reserves held by banks amounted to $6,201.9 million.

Pakistan received the first loan tranche of $991.4 million from the International Monetary Fund (IMF) on July 9 last year, which helped bolster the reserves. In late December, the IMF released the second loan tranche of around $454 million.

Previously, the reserves jumped on account of $2.5 billion in inflows from China.

A couple of months ago, the SBP successfully made a foreign debt repayment of over $1 billion on the maturity of Sukuk.

In December 2019, the foreign exchange reserves surpassed the $10-billion mark owing to inflows from multilateral lenders including $1.3 billion from the Asian Development Bank (ADB).

Foreign investment of over $3 billion in the debt market in the current fiscal year also played an important role in the growing foreign currency reserves.

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.