SBP's forex reserves surpass 31-month high

Pakistan's foreign exchange reserves, held by the State Bank of Pakistan (SBP), increased $84 million, reaching over 31-month high at $11.26 billion in the week ended November 8, 2024.

The foreign currency deposits rose for the 16th successive week, according to the central bank's weekly update released on Thursday.

The persistent growth in reserves supported the Pakistani rupee in extending gains by Rs0.11 to Rs277.74 against the US dollar in the inter-bank market. The local currency continued its uptrend for the second consecutive day, the SBP reported.

Gold, however, dropped Rs5,500 to a two-month low at Rs266,400 per tola (11.66 grams) in line with the decline in global markets.

The foreign exchange reserves have cumulatively increased over $2.23 billion in the past four months, of which less than half ($1.03 billion) came as a first loan tranche from the International Monetary Fund (IMF) in late September.

The reserves grew despite the recent repayment of $1 billion in foreign debt by the central bank. Now, the country's capacity to pay for imports has grown to over two months.

The central bank attributed no reason for the increase in foreign currency reserves. However, it commented the other day that it was purchasing the greenback from local currency markets to meet foreign debt obligations and bolster the country's reserves.

Meanwhile, the reserves held by commercial banks fell $50.3 million in the week under review and stood at $4.71 billion. Accordingly, the country's total reserves rose $33.7 million to $15.96 billion.

In the currency market, the rupee has cumulatively appreciated Rs0.19 in the past two consecutive days, driven by improvement in dollar supply compared to its demand across the banking network.

The rupee received extensive support from the ongoing talks between Pakistan and an International Monetary Fund (IMF) review mission for the next loan tranche of around $1 billion. The global lender has expressed satisfaction over the performance of Pakistan's economy.

On the other hand, gold has cumulatively dropped Rs21,500, or 7.5%, in the past two weeks, settling at Rs266,400 per tola, according to the All Pakistan Saraf Gems and Jewellers Association.

With the latest decrease of $55 in the international market, bullion has dipped by a total of $232 over two weeks to $2,552 per ounce (31.10 grams) in the backdrop of Trump's US election win.