Forex reserves rise for 15th consecutive week

SBP deposits stand at $11.17b with addition of $18m; rupee drops slightly

KARACHI:

Pakistan's foreign exchange reserves, held by the State Bank of Pakistan (SBP), rose $18 million to $11.17 billion in the week ended November 1, 2024, maintaining their upward trend for the 15th consecutive week, according to the central bank's weekly update on Thursday.

The consistent increase in foreign exchange reserves, however, failed to arrest the downtick in the Pakistani currency. The rupee fell Rs0.06 to a seven-week low at Rs277.95 against the US dollar in the inter-bank market. It was the fourth straight day of depreciation for the local currency.

The foreign exchange reserves have cumulatively increased by over $2 billion in the past four months, of which half of the amount ($1.03 billion) came in the shape of first loan tranche of the International Monetary Fund (IMF) in late September.

The latest increase in reserves has strengthened the country's capacity to pay for imports.

The central bank attributed no reason for the improvement in reserves. However, it has said recently that it is purchasing the greenback from local currency markets to meet foreign debt obligations and bolster the country's reserves.

Finance Minister Muhammad Aurangzeb has also stated that Pakistan's reserves will likely surge to $13 billion by the end of current fiscal year in June 2025 – a level that will provide import cover for three months.

The continuous improvement in reserves has instilled confidence among policymakers that global credit rating agencies like S&P, Moody's and Fitch will upgrade Pakistan's rating to 'B' in the ongoing fiscal year, up from the existing rating of 'C'.

This will clear the way for the government to raise new financing from international markets by floating Eurobonds in the next fiscal year. In the week ended November 1, the foreign exchange reserves held by the commercial banks shrank $135.4 million to $4.76 billion. Accordingly, the country's total reserves decreased $117.2 million, settling at $15.93 billion.

The rupee has cumulatively depreciated Rs0.25 in the past four consecutive days due in part to the strengthening US dollar against other major global currencies such as the euro and pound.

Furthermore, the continuous purchase of dollars by the central bank and slowdown in the sale of dollar proceeds by exporters have contributed to the rupee's downward trend.

Gold drops sharply

Gold dived Rs5,400 to Rs276,800 per tola (11.66 grams) in the local market, losing shine in line with global trends.

The precious metal has dropped by a total of Rs6,900 in the past three days, according to the All Pakistan Saraf Gems and Jewellers Association. It decreased $65 to $2,662 per ounce (31.10 grams) in the international market after Donald Trump won presidential elections in the US.