Pakistan’s forex reserves hit 163-week high

KARACHI: Pakistan’s foreign exchange reserves reached a 163-week high of $16.875 billion as of June 6, data from the State Bank of Pakistan showed on Thursday.

The country’s reserves rose by $277 million in the reporting week and have seen an increase of $2.88 billion so far this fiscal year.The forex reserves held by the SBP rose by $167 million to $11.676 billion -- highest since January 20. The SBP’s reserves are enough to cover 1.94 months of imports.

The reserves of commercial banks rose by $111 million to $5.199 billion.The SBP’s reserves continued to increase due to a current account surplus. Additionally, inflows from the International Monetary Fund (IMF); rollovers from friendly nations; and the SBP’s dollar buying from the market played a crucial role in bolstering forex reserves.

“Reserve surge is due to improved exports, massive remittances, and the IMF and bilateral inflows,” Ali Najib, the deputy head of trading at Arif Habib Limited, wrote in a note.“This boosts investor confidence, strengthens the rupee, and enhances the country’s ability to pay for imports and service debt,” Najib added.

“Higher reserves reduce default risk and help stabilise inflation and the overall macroeconomic environment,” he said. The SBP received the second tranche of $1.023 billion from the IMF under the $7 billion loan programme last month. The SBP purchased $5.9 billion from the interbank market during June 2024 and February 2025 to boost its reserves and meet external debt repayments.

Remittances to Pakistan jumped in May to their second-highest level on record. These inflows surged to $3.7 billion in May, a 16 per cent increase from the previous month and a 14 per cent rise from a year earlier. Total remittances for the 11 months of the fiscal year 2025 jumped to $34.9 billion, up from $27.1 billion a year ago.

The SBP expects remittances to reach nearly $38 billion in the current fiscal year, an increase from $30.3 billion in FY24. The government has also set a remittances target of $39.4 billion for FY26. Additionally, the current account deficit target for FY26 is set at $2.1 billion, or 0.5 per cent of GDP, compared to a revised target of a $1.5 billion surplus, or 0.4 per cent of GDP, for FY25.

Finance Minister Muhammad Aurangzeb at a post-budget briefing on Wednesday said the first instalment of $500 million worth of Eurobonds is due in September, followed by the next in March. He said that with the international credit rating improving, the government wants to access the euro and US dollar markets, which is expected in 2026, but certainly not this calendar year.