Forex reserves rise to 5-week high at $9.29b

Rupee depreciates in inter-bank market; gold hits new peak

KARACHI:

Pakistan's foreign exchange reserves, held by the State Bank of Pakistan (SBP), increased $19 million and reached a five-week high at $9.29 billion in the week ended August 16, 2024, according to the central bank's weekly update released on Thursday.

Despite that, the Pakistani rupee dropped Rs0.15 as it extended its downturn for the second successive day. It closed at Rs278.67 against the US dollar in the inter-bank market.

On the other hand, gold maintained its record-breaking spree for the third consecutive day, rising Rs800 to settle at a new all-time high of Rs261,800 per tola (11.66 grams) in contrast to the downtrend in the global market. According to the SBP data, its foreign exchange reserves have continued to improve for the past four consecutive weeks as they rose a cumulative $264.6 million. The reserves have stayed above $9 billion since late June, which provides import cover for less than two months.

Though the central bank cited no reason for the increase in foreign exchange reserves, the growth came apparently in the wake of continuous purchases of the greenback by the central bank from local currency markets for making foreign debt payments and building the reserves. The central bank projected in July that reserves would soar $4 billion to $13 billion in the current fiscal year – July-June 2024-25.

Meanwhile, the foreign exchange reserves held by commercial banks ticked up $3 million in the week ended August 16, 2024 and settled at $5.37 billion. Accordingly, the country's total foreign exchange reserves increased $22.2 million to $14.67 billion.

In the inter-bank currency market, the rupee has booked a cumulative drop of Rs0.33 in the past two days primarily on the back of reports of a slight delay in the International Monetary Fund (IMF) executive board's approval for a $7 billion loan programme for Pakistan. The board is now expected to give its nod in September.

Pakistan has met most of the conditions of the loan programme and achieved a staff-level agreement with the lender. However, the government has not yet got guarantees for the rollover of $12 billion in loans received from friendly countries. The Exchange Companies Association of Pakistan reported that the local currency remained stable at Rs280/$ for the second consecutive day in the open market.