Critical level: SBP-held foreign exchange reserves fall to $8.39bn

Foreign exchange reserves held by the State Bank of Pakistan (SBP) fell another $190 million, clocking in at an alarming level of $8.39 billion during the week ended on July 29, 2022, as economic policymakers in the country continued to scramble over securing dollar inflows.

Data released by the SBP on Thursday said total liquid foreign reserves held by the country stood at $14.21 billion. Net foreign reserves held by commercial banks clocked in at $5.82 billion.

“During the week ended on 29-Jul-2022, SBP’s reserves decreased by $190 million to $8,385.4 million due to external debt and other payments,” said the SBP.

Last week, foreign exchange reserves held by the central bank had declined $754 million.

The reserves’ position is critical for Pakistan which is desperately seeking dollar inflows to meet its balance-of-payments needs. A low level of reserves has caused severe pressure on its currency market with the rupee witnessing its worst monthly performance in July in over 50 years.

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It required a combination of an improvement in Pakistan’s trade deficit, export proceeds as well as IMF’s recent statement on the country’s successful completion of all prior actions to halt a slide that saw the rupee close in on the 240 level in the inter-bank market.

On Thursday, the rupee appreciated to close near the 226 level.