Foreign exchange: SBP reserves drop $728m to $11.32b

Decrease reflects debt repayment, settlement of arbitration award related to mining project

KARACHI:

The foreign exchange reserves held by the central bank decreased 6.04% on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.

On April 1, the foreign currency reserves held by the SBP were recorded at $11,319.2 million, down $728 million compared with $12,047.3 million on March 25.

According to the central bank, the decrease largely reflected debt repayment and government’s payment pertaining to the settlement of an arbitration award related to a mining project.

Overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $17,476.9 million. Net reserves held by banks amounted to $6,157.7 million.

In the week ended August 27, 2021 the foreign exchange reserves held by the central bank soared to an all-time high of $20.15 billion after Pakistan received general allocation of Special Drawing Rights (SDRs) worth $2,751.8 million from the IMF on August 24.

On March 30, 2021, Pakistan borrowed $2.5 billion through Eurobonds by offering lucrative interest rates to lenders aimed at building the foreign exchange reserves.

It received the first loan tranche of $991.4 million from the IMF on July 9, 2019, which helped bolster the reserves. In late December 2019, the IMF released the second loan tranche of around $454 million.

The reserves also jumped on account of $2.5 billion in inflows from China. In 2020, the SBP successfully made 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).