Forex reserves add another $24m

SBP's foreign currency deposits reach $9.53b, lend support to rupee

KARACHI:

Pakistan's foreign exchange reserves, held by the State Bank of Pakistan (SBP), increased $24 million and reached over 26-month high at $9.53 billion in the week ended September 20, 2024 as the central bank apparently continued to purchase US dollars from local currency markets to bolster its foreign currency deposits.

This, coupled with approval of a $7 billion loan programme by the International Monetary Fund (IMF), provided support to the rupee, which appreciated Rs0.16 to a six-month high at Rs277.69/$ in the inter-bank market.

It was the ninth consecutive week of increase in the SBP's foreign exchange reserves, during which they rose a cumulative $506.4 million over a period of two months, according to the central bank's latest weekly update released on Thursday.

The growth in reserves came on the back of increased supply of the greenback in the country. Robust inflows of worker remittances and improvement in export earnings kept higher the supply of foreign currency in banking and retail networks.

Remittances surged to $3 billion a month in the first two months (Jul-Aug) of the current fiscal year compared to the monthly average of $2.5 billion in the previous year. The reserves continued to move north despite a smooth repayment of the maturing small foreign loans.

SBP Governor Jameel Ahmad recently projected that the foreign exchange reserves would soar to around $13 billion by the end of current fiscal year on June 30, 2025. He acknowledged that the central bank was absorbing surplus supply of the greenback from local currency markets to replenish its reserves.

In addition, the reserves held by commercial banks rose $22.6 million to $5.33 billion in the week ended September 20 compared to $5.31 billion in the prior week.

Overall forex reserves of the country settled above 26-month high at $14.87 billion with an increase of $46.6 million in the week under review. Exchange Companies Association of Pakistan reported that the rupee edged up Rs0.03 on a day-on-day basis and closed at Rs280.30/$ in the open market.

Gold at new peak

Gold increased Rs1,500 to a new all-time high at Rs277,000 per tola (11.66 grams) on Thursday in line with the global trend. In the international market, the precious metal rose $12 to a fresh record high at $2,665 per ounce (31.10 grams).