SBP-held foreign exchange reserves fall below $8bn

Foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased by $125 million on a weekly basis, clocking in at $7.93 billion as of August 18, data released on Thursday showed.

Total liquid foreign reserves held by the country stood at $13.25 billion. Net foreign reserves held by commercial banks stood at $5.32 billion.

The central bank cited debt repayments as the reason for the decrease in the foreign currency reserves.

“During the week ended August 18, 2023, SBP’s reserves decreased by $125 million to $7,930.3 million on account of debt repayments,” it said.

Last week, foreign exchange reserves held by the SBP increased by $12 million.

The central bank reserves saw a decline after gaining a little in the week earlier. Before, it had declined for three straight weeks, mainly due to debt repayments.

In July, reserves held by the SBP got a boost as Pakistan received the first tranche of about $1.2 billion from the International Monetary Fund (IMF) after its lender approved a new $3-billion Stand-By Arrangement.

However, the central bank reserves are now under pressure on the back of debt repayments, rise in import payments after ease in restrictions, and lack of fresh inflows.

After reporting a surplus for four successive months, Pakistan’s current account posted a deficit of $809 million in July, the highest since October 2022.

Meanwhile, the Pakistani rupee registered a new record low as it dropped below the 300 level for the first time against the US dollar in the inter-bank market on Thursday. It settled at 300.22, a decrease of Re0.58 or 0.19%, as per the State Bank of Pakistan.