Forex reserves further rise by $106m

SBP reserves hit 30-month high at $10.8 billion, yet rupee weakens, shedding Rs0.07 to Rs277.79 against US dollar.

KARACHI:

Pakistan's foreign exchange reserves, held by the State Bank of Pakistan (SBP), increased $106 million to a new 30-month high at $10.8 billion in the week ended October 4, 2024 apparently in the wake of greenback purchases by the central bank from local currency markets.

According to the State Bank of Pakistan (SBP) data, it was the 11th consecutive week when reserves had gone up, with a cumulative surge of $1.78 billion in about three months. As reserves continue to grow, Pakistan's capacity to finance imports has grown to over two months compared to less than one month in June 2023. The uptrend, however, failed to support the Pakistani rupee in making a big rebound. It shed Rs0.07 day-on-day at Rs277.79 against the US dollar in the inter-bank market.

The local currency maintained its losing streak for the fourth consecutive day, depreciating by a total of Rs0.27. Though the central bank gave no reason for the latest growth in foreign exchange reserves, it told media the other day that it was buying US dollars from local currency markets to replenish the reserves and repay the maturing foreign debt. The central bank chief anticipated that the reserves would increase to $13 billion by the end of current fiscal year on June 30, 2025.

According to Thursday's data, the foreign currency reserves held by commercial banks dropped $42.2 million to $5.24 billion. Accordingly, the country's total reserves rose $64.1 million to $16.05 billion.

The rupee-dollar exchange rate, however, has continued to drop in the current week despite optimism surrounding the visit of a Saudi Arabian delegation, which is expected to unveil plans for billions of dollars in investment for Pakistan.

The currency market also ignored healthy inflows of worker remittances, which soared to $2.85 billion in September, indicating that the supply of foreign currency remained robust in the banking system. The central bank also reported recently that the supply of foreign currency was significant in the market, which helped meet all requirements including import payments.

Earlier, Pakistan received first loan tranche of $1.03 billion under a new $7 billion International Monetary Fund (IMF) programme, which came in late September.