Forex reserves get $112m boost

Pakistan's foreign exchange reserves, held by the State Bank of Pakistan (SBP), got a $112 million boost in the week ended August 23, 2024 as they jumped to a six-week high at $9.4 billion apparently on the back of central bank's purchasing of the greenback from local markets.

Despite a nominal drop of $2.7 million in the reserves held by commercial banks compared to the previous week, the country's total reserves hit a 26-month high at $14.78 billion, according to the SBP's weekly update released on Thursday. Pakistani currency, however, did not take strength from the rise in reserves as it depreciated for the second consecutive day, falling by Rs0.19 to a one-week low at Rs278.64 to a dollar.

The rupee extended its downturn over speculation that Pakistan's export earnings may receive a blow from the jump in cost of goods production on account of exorbitant power tariffs and imposition of new taxes. The SBP's reserves have continued to improve over the past five weeks, rising by a cumulative $376.2 million.

Though the central bank attributed no reason for the growth in reserves in its weekly update, high officials of the bank had said in July that they were purchasing US dollars from local currency markets with the aim of replenishing the reserves. Financial experts revealed that the supply of foreign currency remained higher than its demand for imports. The central bank is buying the surplus supply to repay the country's maturing foreign debt and ramp up its reserves.

Robust inflows of worker remittances and growing export earnings have kept high the supply of US dollars than their demand from importers, though imports are rising gradually.

The SBP projected in July that its reserves would soar by $4 billion to $13 billion by the end of current fiscal year in June 2025. According to the weekly update, the foreign exchange reserves held by commercial banks ticked down by $2.7 million and settled at $5.37 billion. The country's total reserves went up by $108.9 million to $14.77 billion.

On Thursday, gold price dropped Rs2,200 to Rs261,500 per tola (11.66 grams) in contrast to an increase of $4 to $2,516 per ounce (31.10 grams) in the international market.

All Pakistan Saraf Gems and Jewellers Association reported bullion rates after a hiatus of three days, during which the market stayed shut for different reasons.