Reserves hit 31-month high at $11.16 billion

Pakistan's foreign exchange reserves, held by the State Bank of Pakistan (SBP), increased $116 million and reached a 31-month high of $11.16 billion in the week ended October 25, according to the central bank's weekly update released on Thursday.

It was the 14th consecutive week of increase in the SBP's foreign exchange reserves, during which they surged over $2 billion. Half of the growth came on the back of release of the International Monetary Fund's (IMF) first loan tranche of $1.03 billion in late September.

The consistent increase in reserves, however, failed to arrest the ongoing depreciation of the Pakistani rupee.

The local currency depreciated Rs0.06 to a five-week low at Rs277.85 against the US dollar in the inter-bank market, maintaining its decline for the fourth successive day. The rupee has cumulatively lost Rs0.21 in four days.

The central bank did not attribute any reason for the rise in reserves. But SBP Governor Jameel Ahmad recently stated that the bank was buying US dollars from local currency markets to repay the maturing foreign debt and bolster the country's reserves.

The SBP governor has projected that Pakistan's reserves will surge to $13 billion by the end of current fiscal year on June 30, 2025.

According to the latest data, the foreign exchange reserves held by commercial banks fell $83.8 million to $4.89 billion in the week ended October 25. Accordingly, the country's total reserves rose $31.9 million to $16.05 billion.

Icon Management FX market expert Syed Hassan Haider said that the rupee continued to depreciate in the wake of a sharp drop in inflows of US dollars. Exporters have slowed down the sale of export proceeds on the futures counter. Haider projected that the rupee would resume its uptrend shortly as workers' remittances would start coming in the first week of November.