KARACHI: The country’s total liquid foreign exchange reserves increased by $ 36 million during the last week due to a surge in commercial banks’ reserves.
According to a weekly report issued by the State Bank of Pakistan (SBP) on Thursday, the total liquid foreign exchange reserves held by the country stood at $ 13.257 billion as of Jan 5, 2024 compared to $13.221 billion as of Dec 29, 2023.
The break-up of the foreign reserves position shows that during the week under review, SBP’s reserves decreased by $ 66 million to $ 8.155 billion due to debt repayments. However, net foreign reserves held by commercial banks rose by $ 102 million to $5.102 billion as of Jan 5, 2024 up from $4.999 billion as of Dec 29, 2023.
Pakistan’s central bank reserves decrease $66mn, now stand at $8.15bn
However, Karachi Interbank Offered Rate (KIBOR) on Thursday reached the 10-month low and below 21 percent level after decline in cut-off yields of short term government papers.
KIBOR in Pakistan for the past few months was on decline and cumulatively down by four percent during the last four months. Benchmark lending rate 6-month KIBOR was down from a peak of near 25 percent in Sep 2023 to less than 21 percent on Thursday. Analysts said the downward trend in KIBOR hints that monetary policy easing will be soon.
KIBOR is a daily basis interest rate at which banks offer to lend funds to other banks and mainly the banks also use it as a benchmark for lending to the corporate or private sector.
According to State Bank of Pakistan’s (SBP) statistics, 6-month KIBOR closed at 20.98 percent on Thursday compared to 21.31 percent on Wednesday, depicting a decline of 33 bps.
The current decline witnessed after the auction of the Government of Pakistan Market Treasury Bills (MTBs) held on Wednesday and cut-off yield of all short term papers fell ranging 44-59 basis points (bps).
Analysts at Topline said that KIBOR came below 21 percent, almost at 10-month lowest level, after T-bill yields fell to near 20.6 percent, amid hope of a rate cut by monetary policy committee of the SBP.
The decline in lending rates is a positive sign for the private sector and credit growth to the private sector is likely to increase in coming months, they added.
It may be mentioned here that the federal government on Wednesday received Rs 2.75 trillion worth bids for sale of T-bills, however the government borrowed only Rs 283 billion.
Interestingly, yields fell ranging 44 to 59 bps in the auction and the cut-off yield on 3, 6, and 12-month bonds stands at 20.99 percent, 20.96 percent and 20.84 percent, respectively.
In the last few months, the interest rate on short term government papers has fallen by more than 3 percent.
Copyright Business Recorder, 2024
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