SBP’s forex reserves rise to $4.3b

The foreign exchange reserves held by the central bank rose by 12.7% on a week-on-week basis to $4.3 billion, according to data released by the State Bank of Pakistan (SBP) on Thursday.

On March 3, 2023, the SBP’s foreign currency reserves stood at $4,301 million, up by $487 million compared to $3,814.1 million on February 24.

The central bank attributed the rise in foreign exchange reserves to the receipt of $500 million as government of Pakistan’s commercial loan from China.

Overall, the liquid foreign currency reserves held by the country, including the net reserves held by banks other than the SBP, stood at $9,754 million.

The net reserves held by banks amounted to $5,453 million.

Ismail Iqbal Securities Head of Research Fahad Rauf recently said that further improvement in Pakistan’s foreign currency reserves depended on the revival of International Monetary Fund’s (IMF) loan programme and the inflow of fresh financing from other multilateral and bilateral creditors, which included China, Saudi Arabia and the United Arab Emirates.

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“They (FX reserves) are projected to rise to around $7-8 billion by the end of current fiscal year on June 30, 2023,” he said.

The country’s reserves have continued to improve after the central bank opted to buy US dollars from the inter-bank market in the wake of a surge in supply of the greenback compared to its demand.

“Availability of surplus US dollars in the inter-bank market has prompted the central bank to intervene (buy the surplus),” a source said.