SBP forex reserves cross $16b

Inch up by $16m; T-bill yields drop, spotlight shifts to stock market

KARACHI:

Pakistan's foreign exchange reserves recorded a modest weekly increase, with the State Bank of Pakistan's (SBP) holdings rising by $16 million to $16.0877 billion in the week ending January 16, 2026, according to official data released on Thursday. The improvement lifted the country's total liquid foreign reserves, which combine central bank buffers and commercial bank holdings, to $21.2582 billion. Of this, $16.0877 billion is held by the SBP, while commercial banks hold net foreign reserves of $5.1705 billion.

Meanwhile, after nearly four years of double-digit returns in Pakistan's fixed-income market, T-bill and PIB yields have fallen back into single digits, reshaping investor preferences and strengthening the case for equities as the preferred investment class, according to a Pakistan Strategy update issued by Topline Securities.

The report highlights that equity exposure in mutual funds remains structurally depressed at 13.2% of assets under management (AUMs) as of December 2025, nearly half of the 13-year historical average of 25.9%, despite notable net equity inflows during 2025 and early 2026. This under-allocation, combined with easing risk-free rates and rising expectations of a 50bps to 75bps policy rate cut, is expected to accelerate conversions from fixed income to equities through 2026.

Topline estimates that a normalisation of equity allocation to 18% of AUMs by end-2026 could generate Rs175 to Rs200 billion, or $600 to $750 million, in net mutual fund inflows, providing sustained liquidity support to the stock market and reinforce a medium-term, equity-led investment cycle.

In the currency market, the Pakistani rupee edged up 0.01% against the US dollar in the interbank market on Thursday, closing at 279.87, up Rs0.03 from Wednesday's 279.90.

Meanwhile, gold prices registered a decline in the local market, with the price of 24-karat gold per tola falling by Rs800 to Rs505,562. The price of 10 grams of 24-karat gold dropped by Rs686 to Rs433,437, while 10 grams of 22-karat gold declined by Rs629 to Rs397,331, according to the All Pakistan Sarafa Gems and Jewellers Association.

Silver also weakened, with 24-karat silver per tola falling by Rs30 to Rs9,903, and 10 grams declining by Rs25 to Rs8,490.