Alarming level: SBP-held foreign exchange reserves decline $341mn to $8bn

Foreign exchange reserves held by the State Bank of Pakistan (SBP) fell another $341 million, clocking in at an alarming level of $8 billion as of September 23, 2022, according to data released on Thursday.

Total liquid foreign reserves held by the country stood at $13.76 billion, said the SBP on Thursday. Net foreign reserves held by commercial banks amounted to $5.76 billion.

“During the week ended on September 23, 2022, SBP’s reserves decreased by $341 million to $8,005.9 million due to external debt repayment,” said the SBP.

SBP-held foreign exchange reserves decline $278mn to $8.35bn

Earlier this month, SBP's reserves had increased as the central bank received the $1.2-billion tranche from the International Monetary Fund (IMF).

Later, the Saudi Development Fund also rolled over a $3-billion deposit with the SBP, an amount that was due to mature in December 2022. However, this development was not meant to increase foreign exchange as the amount was already part of SBP's reserves.

The reserves’ position is critical for Pakistan that has been desperately seeking dollar inflows to meet its balance-of-payments needs.

A low level of reserves 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), but came under pressure once again as floods hit and import restrictions eased.

The local currency has staged a recovery this week, closing at Rs229.63 per dollar on Thursday, as markets factored in the return of Ishaq Dar as finance minister, with the bullish trend prevailing due to sentiment.