Reserves soar to $10.7 billion

Pakistan's foreign exchange reserves, held by the State Bank of Pakistan (SBP), surged $1.17 billion to a 30-month high at $10.70 billion in the week ended September 27, 2024 mainly due to the receipt of first loan tranche from the International Monetary Fund (IMF), according to the weekly update released by the central bank on Thursday.

The rise in forex reserves, however, failed to support the rupee to stay strong, as the currency lost Rs0.10 and hit a one-week low at Rs277.74 against the US dollar in the inter-bank market, receding from a six-month high of Rs277.64/$ touched on Wednesday, according to the State Bank of Pakistan's (SBP) data.

The central bank reported that "the increase in SBP's reserves is mainly due to receipt of $1,026.9 million from IMF under Extended Fund Facility (EFF) programme."

The reserves have continued to rise for 10 consecutive weeks, increasing by a cumulative $1.67 billion (or 19.55%) compared to reserves of $9.03 billion in mid-July 2024.

Almost one-third of the growth came in the wake of robust remittances from overseas Pakistanis, Roshan Digital Account (RDA) inflows and improvement in export earnings in recent months. The remaining increase was the outcome of IMF's first tranche released last week.

The reserves of $10.7b were last seen in mid-April 2022 and they are now providing over two months of import financing compared to less than one month of import cover at around $4 billion about 15 months ago.

SBP Governor Jameel Ahmad said a couple of days ago that there was ample supply of foreign currency in the inter-bank market as inflows remained robust, which were smoothly meeting demand for the greenback for imports and other expenses like repaying foreign debt.

He said the central bank was purchasing dollars from local currency markets to boost its reserves and repay debt. He projected that the foreign exchange reserves would increase to $13 billion by the end of current fiscal year on June 30, 2025.