Forex: Reserves ease to $16.85b

KARACHI: Foreign exchange reserves fell to $16.85 billion in the week ended November 19, down from $16.91 billion the previous week, the central bank said on Thursday.

Reserves held by the State Bank of Pakistan (SBP) eased to $13.11 billion from $13.13 billion in the week ended November 12, while those held by commercial banks fell to $3.74 billion from $3.78 billion, said SBP chief spokesman Syed Wasimuddin.

Reserves had hit a record high of $17.1 billion in the week ended October 15 because of an increase in remittances from overseas Pakistanis and a narrowing trade deficit.

They were further boosted in September after the IMF sent Pakistan $450 million and said that the money would go towards the budget to help with additional spending for flood relief and immediate foreign exchange needs.

This was separate from the $11.3 billion IMF bailout programme, agreed in 2008. In May, Pakistan received $1.13 billion, the fifth tranche of the programme. The IMF is due to present Pakistan’s case to its board in December for the possible approval of the sixth tranche.

In the currency market, the rupee eased against the dollar to close at 85.62/66, compared with Wednesday’s close of 85.50/55 amid strong demand for the US currency from importers.

Dealers said the local unit is expected to stay under slight downward pressure in coming days, although healthy dollar inflows, especially in the form of remittances from overseas Pakistanis, are expected to prevent any sharp fall.

In the money market, overnight rates fell to close at 10.50 per cent from 11.50 per cent a day earlier, as the funds available in the interbank market were more than the demand, dealers said.

Published in The Express Tribune, November 26^th, 2010.