Foreign exchange reserves hit three-year high at $18.7bn

KARACHI: Pakistan’s total foreign exchange assets reached a three-year high of $18.7 billion as of November 2024, providing support to the country’s external account.

“Pakistan’s total Foreign Exchange (FX) assets (liquid reserves plus gold) stood at a three-year high of $18.7 billion as of November 2024. This includes gold reserves of $5.5 billion, which is near record high thanks to rising gold prices,” Topline Securities reported on Saturday.

“In addition to this, $4.7 billion of the liquid reserves are held with commercial banks and are not part of this total FX assets,” it added.

Saad Hanif, the head of research at Ismail Iqbal Securities, said the rising trend in the country’s reserves reflects the impact of strict import restrictions, delays in dividend repatriation and successful debt rollovers with multilateral and bilateral partners, which collectively eased pressure on foreign exchange outflows.

He thinks the consistent increase in gold reserves indicates a diversification strategy to strengthen external accounts. Gold has hit multiple all-time highs this year, and Goldman Sachs predicts prices could hit $3,000 per troy ounce by the end of 2025.

“While these measures have provided temporary stability, sustainable reserve growth will require structural reforms, including export enhancement, attracting foreign investment and improving energy sector efficiency,” Hanif said.

“Administrative controls must eventually give way to policy-driven economic stability for long-term resilience,” he added. Pakistan recorded a current account surplus of $944 million in the five months of the fiscal year 2025, compared with a deficit of $1.67 billion during the same period last year. As of January 3, the SBP’s foreign exchange reserves amounted to $11.7 billion—enough to cover over two months of imports. Pakistan is seeking to secure a $1 billion loan tranche from the International Monetary Fund as a part of the $7 billion Extended Fund Facility programme. The next IMF review is due this quarter. This week, Prime Minister Shehbaz Sharif announced that the United Arab Emirates has agreed to roll over a $2 billion debt due this month. According to the SBP, out of total external payments of $26.1 billion, $10.4 billion has already been paid or rolled over. The remaining debt repayment for the fiscal year, excluding planned rollovers, stands at $5 billion.