SBP’s forex reserves fall $555m to $7.8 billion

The foreign exchange reserves held by the central bank decreased 6.6% on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.

On August 5, the foreign currency reserves held by the SBP were recorded at $7,830.3 million, down $555 million compared with $8,385.3 million on July 29.

According to the central bank, the decrease came due to external debt payments.

The SBP, however, said “debt repayments are expected to moderate during the next three weeks of this month. In fact, around three-fourths of debt servicing for the month of August was concentrated during the first week.” Overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13,561.1 million. Net reserves held by banks amounted to $5,730.8 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.

Published in The Express Tribune, August 12^th, 2022.

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