Forex reserves stay stable above $9 billion

Pakistan’s foreign exchange reserves, held by the central bank, stood largely stable above $9 billion, supporting the local currency which remained pegged at Rs278.59 against the US dollar in the inter-bank market on Thursday.

According to the State Bank of Pakistan (SBP)’s latest weekly update, the foreign exchange reserves ticked down merely $6 million apparently due to official payments and settled at $9.10 billion in the week ended June 7, 2024.

The reserves provide less than two months of import cover, which requires high officials to take measures to ramp up foreign income and slash expenditures to strengthen the country’s import payment capacity. The reserves held by commercial banks, however, increased $175.4 million to $5.28 billion in the week under review. Accordingly, Pakistan’s total reserves rose $168.2 million to $14.38 billion.

Central bank data suggests that the Pakistani currency remained largely stable as it edged down a nominal Rs0.02 and closed at Rs278.59 against the US dollar in the inter-bank market. This indicates that demand for the greenback was not higher than its supplies in the domestic market.

The local currency has stayed stable ahead of securing the next International Monetary Fund (IMF) loan programme. The lender’s conditions for the loan will provide direction to the rupee-dollar parity in future. Until then, the exchange rate is expected to remain stable.