Forex reserves ease to $16.39 billion

Rupee, overnight rates flat as foreign reserves fall.

KARACHI: Foreign exchange reserves fell to $16.39 billion in the week ended December 4, down from $16.74 billion the previous week, the central bank said on Thursday.

Reserves held by the State Bank of Pakistan (SBP) fell to $12.65 billion from $12.97 billion and those held by commercial banks also eased to $3.74 billion from $3.77 billion, said the SBP.

“The State Bank reserves fell due to debt payments,” said Syed Wasimuddin, chief spokesman for the central bank.

The reserves 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.

Earlier, the reserves got a boost 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.

In the currency market, the rupee ended flat at 85.70/75 to the dollar, compared with Wednesday’s close of 85.72/74 and dealers expect the local unit to come under pressure following an increase in international oil prices. Global oil prices climbed more than $1 to around $89 on Thursday.

In the money market, overnight rates also ended flat at their top level of 13.90 per cent, unchanged from the previous day’s close, despite scheduled inflows of Rs21 billion ($245 million), amid a lack of liquidity in the interbank market.

Published in The Express Tribune, December 10^th, 2010.