Pakistan forex reserves fall over 2% to stand at $7.4bn

KARACHI: Following a decline of 2.07%, Pakistan's foreign exchange reserves held by the State Bank of Pakistan (SBP) stood at $7.4 billion.

On October 21, the foreign currency reserves held by the SBP were recorded at $7,439.9 million, down by $157 million compared with $7,597.2 on October 14, data released by SBP showed on Thursday.

The central bank cited external debt repayment as a major reason behind the decline.

However, it mentioned that SBP has received $1.5 billion from the Asian Development Bank as a disbursement of loans for the Government of Pakistan. “These proceeds will be reflected in SBP reserves for the week ending October 28,” the central bank said.

Overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13,162.2 million.

Net reserves held by banks amounted to $5,722.3 million. 

With the current foreign exchange reserves position, Pakistan has an import cover of fewer than 1.1 months.

The reserves’ position is critical for Pakistan which has been desperately seeking dollar inflows to meet its balance-of-payments needs.

A critical level of reserves has caused severe pressure on the Pakistani rupee with the local unit depreciating constantly. Pakistan’s economy faces serious challenges due to decreasing foreign exchange reserves and political instability.

Foreign exchange reserves were decreasing on weekly basis due to an increase in imports and have fallen below $8 billion, which is an alarming situation. However, funds from multi-lateral partners will improve the position.