SBP buys $4.98bn to boost forex reserves, manage debt

KARACHI: Pakistan’s central bank purchased $4.98 billion from the interbank market during June and November 2024 to increase its foreign exchange reserves and support debt management, according to the latest data from the State Bank of Pakistan.

In November, the SBP bought $1.151 billion from the currency market, compared with $1.026 billion in the previous month.Arif Habib Limited in a brief note to its clients says that the SBP’s net foreign exchange interventions led to a $2.9 billion increase in the country’s forex reserves, with the remaining amount allocated towards managing the country’s debt repayments.

As of February 14, the SBP’s reserves stood at $11.20 billion -- enough to cover more than two months of imports.The SBP’s reserves experienced a slight improvement after three weeks of decline. However, the external debt repayments and the current account deficit, worsened by a growing trade gap, may put pressure on the reserves again, especially in the absence of foreign inflows.

On a more positive note, anticipated disbursements from the International Monetary Fund under the ongoing Extended Fund Facility, along with climate resilience funding, are expected to enhance the forex reserves.

During an event on Monday, Finance Minister Muhammad Aurangzeb said that an IMF mission has arrived in Pakistan to talk about the Climate Resiliency Fund. This technical mission will remain in the country for three to four days, after which further deliberations are expected.Another IMF delegation is anticipated to arrive in Pakistan in the first week of March for formal discussions on the six-month review of the $7 billion loan programme.