Forex reserves dip by $136 million

SBP cites debt repayment for decline in reserves

KARACHI:

Pakistan’s foreign exchange reserves saw a substantial downturn of $136 million, representing a 1.9% slump to reach $6,904.8 million on a week-on-week basis, as reported by the State Bank of Pakistan (SBP) on Thursday.

As of the week ending December 15, 2023, the SBP’s foreign currency reserves stood at $6,904.8 million, marking a $136 million decline compared to the previous week’s total of $7,040.8 million. The central bank attributed debt repayment as the reason for the decrease in reserves.

The total liquid foreign currency reserves for the country, inclusive of reserves held by commercial banks, amounted to $12,068.4 million, with net reserves held by commercial banks standing at $5,163.6 million.

The prior week had witnessed a notable uptick of $21 million in the foreign exchange reserves.

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However, the central bank did not provide specific details regarding the reason for the improvement in reserves.

Previously, research houses pointed out that the SBP’s reserves are currently sufficient to cover imports for only 1.41 months. Pakistan’s central bank has consistently faced pressure on foreign exchange reserves due to ongoing debt repayments. Additionally, an increase in import payments, following the government’s decision to lift restrictions on free imports, has further strained the reserves.

The previous improvement in SBP’s reserves occurred when Pakistan secured a $3 billion International Monetary Fund (IMF) standby arrangement, resulting in the immediate release of $1.2 billion. Moreover, friendly nations like Saudi Arabia and the UAE deposited $3 billion into the SBP’s accounts, further contributing to the increase in reserves.

Published in The Express Tribune, December 22^nd, 2023.

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