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Markets

SBP-held foreign exchange reserves rise $533mn, stand at $4.07bn

  • Increase comes on back of realisation of $300 million proceeds of government of Pakistan’s commercial loan
Published July 3, 2023

Foreign exchange reserves held by the State Bank of Pakistan (SBP) surged $533 million, clocking in at nearly $4.07 billion as of June 23, data released on Monday showed.

The overall number stands at a critical level at around a month of import cover.

Total liquid foreign reserves held by the country stood at $9.34 billion. Net foreign reserves held by commercial banks clocked in at $5.27 billion.

“During the week ended on June 23, 2023, SBP reserves increased by $533 million to $4,069.9 million,” said the SBP. “This is mainly attributed to realisation of $300 million proceeds of government of Pakistan’s commercial loan.”

Last week, the foreign exchange reserves held by SBP decreased $482 million to nearly $3.54 billion.

On Friday, the International Monetary Fund (IMF) announced that its staff and Pakistani authorities have reached an agreement on policies to be supported by a $3-billion, nine-month Stand-By Arrangement (SBA).

The staff-level agreement is subject to approval by the IMF Executive Board, with its consideration expected by mid-July.

“The new SBA builds on the authorities’ efforts under Pakistan’s 2019 EFF-supported programme which expires end-June,” Nathan Porter, IMF Mission Chief to Pakistan, was quoted as saying in the press release on the day the Extended Fund Facility expired.

The development acted as a much needed relief for Pakistan and improved market sentiment.

Comments

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Rebirth Jul 04, 2023 03:23am
If our reserves are rising prior to the transfer of the IMF funds, then our markets will rise even more dramatically than the 5% they did today. Even if there are rules that force a market halt at 5%, they’ll need to be ignored because the low exchange rate will make more people want to invest using the foreign currencies they’re hoarding. It’s true that the capital gains can surpass KIBOR, which must be at 25% now with the IMF preconditions. But for that to happen, they’ll need to let the market continue trading. When the market cap was at 100 billion dollars a few years ago, it was nowhere near to where our market could’ve been because most of our economy isn’t documented and many major businesses and companies haven’t done IPOs. The exchange rate worsened the market cap. We did have more activity since then but just to reach the 100 billion from a few years ago, our market will triple. They will need to allow the 300% increase within the Q1FY23 or there’ll be a flight of capital.
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Builder Jul 04, 2023 12:25pm
I fully agree with @Rebirth. Proper measures will help bring back money from foreign stock markets.
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