SBP forex reserves rise to $4 billion

KARACHI: Pakistan’s foreign exchange reserves held by the central bank increased by $533 million to stand at $4.069 billion in the week ending June 23, the State Bank of Pakistan (SBP) said on Monday.

Total reserves of the country rose by $477 million to $9.340 billion. The reserves of commercial banks, however, fell by $56 million to $5.270 billion.

Increase in the foreign exchange reserves were attributed to Chinese inflows by the SBP.

“This [increase in the forex reserves] is mainly attributed to realisation of $300 million proceeds of GoP [Government of Pakistan] commercial loan,” the SBP said in a statement.

The country paid China $1.3 billion in external debt last month. This, as per the arrangement with Pakistan was refinanced by China to increase its neighbour’s dwindling foreign exchange reserves and prevent default.

June was the due date for $1.3 billion in Chinese commercial loans. According to schedule, Pakistan paid $300 million in debt to the Bank of China and $1 billion to the China Development Bank.

China has refinanced the $1.3 billion in maturing commercial loans that Pakistan requested be refinanced quickly. Of the total money, $1.3 billion was received last month.

Last week, Pakistan reached a staff-level agreement with the International Monetary Fund for a $3 billion loan programme. Given the growing worries about the outlook for the short-term external account, the signing of the new SBA programme has emerged as a significant and positive move.

With SBP’s dwindling forex reserves and significant external repayments of $9 billion, including $4 billion in sovereign rollovers, until December this year, the IMF deal will, for the time being, instil confidence and remove uncertainties.

Pakistan’s dollar bonds rose after the country clinched a deal with the IMF.

The price of the $1 billion Eurobonds that mature in April 2024 increased by 19.4 cents to 76 cents. The price of Eurobonds due in September 2025 increased by 13.1 cents to 56.9 cents. The price of Eurobonds due in April 2026 rose by 10.3 cents to 50.5 cents.