Can't connect right now! retry

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!
December 6, 2019

State Bank’s Nov forex reserves rise to 8-mth high of $9.112bln


December 6, 2019

KARACHI: The central bank’s foreign exchange reserves in November rose to their highest in seven months as growing optimism economic reforms, easing worries about capital outflows from a slowing economy.

State Bank of Pakistan’s (SBP) held foreign exchange reserves rose by $431 million in November to $9.112 billion, central bank data showed on Thursday, marking the highest level since April this year. The increase of $431 million in SBP reserves was on a weekly basis.

The central bank said its reserves increased by $1.8 billion in the first five months of the current fiscal year of 2019/20.

“Increase in the liquid SBP (State Bank of Pakistan) reserves and the reduction of the swaps / forward liabilities reflects the build-up of foreign exchange buffers,” the bank said in a statement. “The foreign exchange swaps / forward liabilities have reduced by $1.95 billion between June-October 2019.”

The SBP’s data showed that the reserves held by the country increased to $15.993 billion in the week ended November 29 from $15.577 billion in the previous week. Reserves of commercial banks, however, fell to $6.880 billion from $6.895 billion. Reserves stood at $7.280 billion in the fiscal year that ended on June 30, 2019.

Analysts said the rise in the SBP’s reserves was mainly attributed to the favourable developments in balance of payments, decline in liabilities, and increased portfolio inflows into government securities. The reserves may be enough to cover the seven weeks of imports, they said.

“Reserves increased owing to low foreign payments and unprecedented flows in Pakistan bonds in the last few weeks,” said Yaqoob Abubakar, an analyst at Tresmark, an application that tracks financial markets. “This is also to note that Pakistan managed to pay around $1 billion on the maturity of Sukuk bond this week without getting any foreign assistance that will further improve the country's image in the near future.”

Analysts said increase in the SBP’s foreign exchange is a healthy sign for the country’s external sector and it could further strengthen the currency, and boost foreign investment in Pakistan. Current account deficit contracted 73.5 percent to $1.5 billion in July-November FY20. The rupee has appreciated 5.6 percent since June 2019.

“Improving foreign exchange reserves is good news for rupee and overall investment climate,” said Mohammed Sohail, CEO at Topline Securities.

Growing foreign investments in short-term Treasury Bills and Pakistan Investment Bonds, which are highly sensitive to changes in exchange rate and interest rates, have crossed $1 billion since July this year.

Topstory minus plus

Opinion minus plus

Newspost minus plus

Editorial minus plus

National minus plus

World minus plus

Sports minus plus

Business minus plus

Karachi minus plus

Lahore minus plus

Islamabad minus plus

Peshawar minus plus