SBP reserves hit new two-year high at $9.4b

KARACHI:

The foreign exchange reserves, held by the State Bank of Pakistan (SBP), reached a new two-year high of $9.40 billion apparently in the wake of robust inflows of workers’ remittances in recent months.

In its latest weekly update on Thursday, the central bank reported “during the week ended on July 5, 2024, SBP’s reserves increased by $16 million to $9,405.1 million.”

This is the second consecutive week when reserves have stayed well above $9 billion, which provide import cover for about two months.

Though the central bank did not disclose the reason for the latest growth in reserves, last week it revealed that Pakistan had received almost half a billion dollars on account of official inflows from multilateral agencies.

The increase in the week ended July 5 may be attributed to healthy remittances of $3.16 billion in June 2024, which were close to the monthly record high of $3.24 billion reached in May 2024.

Experts anticipated that the inflow of remittances from overseas Pakistanis would remain robust in the coming months since a large number of Pakistanis found jobs abroad in recent months. Remittances from non-resident Pakistanis will remain a big source of stabilising the country’s foreign currency reserves.

The reserves held by commercial banks rose to $5.24 billion in the week under review from $5.18 billion last week. Accordingly, the overall reserves of the country surged to $14.64 billion compared to $14.57 billion in the previous week.

Rupee drops

Despite the rise in reserves, Pakistani currency depreciated Rs0.10 and settled at a two-week low at Rs278.61 against the US dollar in the inter-bank market on Thursday.

The local currency maintained its downward trend for the second consecutive day in anticipation of imminent approval of a new International Monetary Fund (IMF) loan programme.

According to the State Bank of Pakistan’s (SBP) data, the rupee had closed at Rs278.51 against the greenback on Wednesday. The depreciation coincided with a rebound in international crude oil prices, which led to the building of import pressure.

The local currency has lost a net Rs0.27 in the first 11 days of the current fiscal year, indicating it has remained largely stable.

It has been moving in a narrow band of Rs278-278.63/$ over the past several months. Earlier, it appreciated 2.75% to Rs278.34/$ in the fiscal year ended June 30, 2024.

Exchange Companies Association of Pakistan (ECAP) reported that the rupee appreciated Rs0.05 on a day-on-day basis in the open market, closing at Rs280.50/$.

Gold up

Meanwhile, gold rose Rs1,200 to over two-and-a-half-month high at Rs246,800 per tola (11.66 grams) in line with the global trend.

In the international market, the precious metal surged $10 to $2,382 per ounce (31.10 grams), according to the local pricing body. Internationally, bullion is attracting renewed buying after the US central bankers said they did not see cuts in interest rate in the near future.