After week's respite, foreign exchange reserves decline once again

KARACHI: After a week’s respite, the country’s foreign exchange reserves held by the State Bank of Pakistan (SBP) once again declined by 1.7%.

On November 18, the foreign currency reserves held by the SBP were recorded at $7,825.7 million, down $134 million compared with $7,959.5 on November 11, data released by SBP showed on Thursday.

Overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13,645 million.

Net reserves held by banks amounted to $5,819.3 million. The central bank attributed the decline to external debt repayment.

With the current foreign exchange reserves position, Pakistan has an import cover of 1.6 months.

The reserve position is expected to strengthen after Pakistan receives funds from friendly countries.

Earlier in the month, Finance Minister Ishaq Dar announced that the SBP will receive $500 million from the Asian Infrastructure Investment Bank (AIIB) in the ongoing month.

In a tweet, the finance minister shared that the AIIB board approved the funding as “co-financing of the Asian Development Bank (ADB) funded BRACE program for Pakistan.”

“These Funds will be received by SBP within November 2022,” he said.

Analysts believe a rather thin forex exchange reserves are not a good omen for the local currency which is currently not on firm footing against the US dollar.