State Bank’s reserves drop to $10.722bln

KARACHI: Pakistan’s official foreign exchange reserves fell by $463 million or 4.2 percent to $10.722 billion in the week that ended on April 3, the central bank reported on Thursday, mainly due to increased foreign debt repayments and panic selling of debt and equities by foreign investors.

The reserves stood at $11.185 billion in the previous week. “This decline is attributed to external debt repayments of $465 million,” the State Bank of Pakistan said in a statement.

The country’s total liquid foreign reserves declined 2.3 percent to $16.988 billion from $17.387 billion a week earlier. However, the reserves held by commercial banks increased to $6.265 billion from $6.201 billion.

The frequent fall in the reserves is due to outflow of foreign investment from government securities, hitting the rupee more than 8 percent since March. Foreigners had invested a total $3.49 billion in treasury bills and bonds since July 2019. However, they withdrew $2.58 billion from government securities mostly during the coronavirus lockdown in the country.

Foreign investment in t-bills stands less than $1 billion ($907.25 million). The International Monetary Fund has said it will provide Pakistan $1.4 billion to help fight the coronavirus under the Fund’s Rapid Financing Instrument Programme.

Pakistan is likely to receive this disbursement next week that will help the country meet the urgent balance of payments needs. Analysts said these inflows were expected to provide cushion to the rupee and foreign reserves.