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The Saudi Fund for Development (SFD) has confirmed rollover of $3 billion deposits maturing on December 5, 2022, for one year, said the State Bank of Pakistan (SBP) on Sunday.

In a tweet, the central bank said the "deposit is placed with SBP and part of its forex reserves".

“This reflects continuing strong and special relationship between KSA and Pakistan,” it added.

In November last year, a deposit agreement was signed between the Kingdom of Saudi Arabia, represented by the SFD, and the Pakistan government, represented by the SBP, in Karachi.

Under the deposit agreement, the SBP statement at the time said, the SFD shall place a deposit of $3 billion with the SBP.

"It will help support Pakistan’s foreign currency reserves and contribute towards resolving the adverse effects of the COVID19 pandemic,” a press release issued by the SBP back then stated.

The development will not increase Pakistan's current level of foreign exchange reserves that currently stand at $14.32 billion. Reserves held by the SBP stand at a critical level of $8.62 billion as of September 9, 2022, according to data released on Thursday. Net foreign reserves held by commercial banks amount to $5.7 billion.

The reserves’ position is critical for Pakistan which has been 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.

The rupee gained some ground as Pakistan met all prior conditions of the IMF, a development that helped it secure $1.17 billion of inflow under the Extended Fund Facility (EFF).

However, lately, the local currency has come under severe pressure yet again, hovering near its all-time low as funding expected from friendly countries has not materialised yet. At the same time, the US dollar has been gaining strength globally with the Federal Reserve poised to unleash another massive interest rate increase this week after the latest data showed a worrying US inflation picture.

On Friday, Pakistan's rupee continued to sustain losses against the US dollar for the 11th successive session, settling with a depreciation of 0.41% in the inter-bank market. The rupee closed at 236.84.

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