Foreign exchange reserves held by the State Bank of Pakistan (SBP) fell $113 million, clocking in at an alarming level of $7.7 billion as of August 26, 2022, as policymakers in the country continued to scramble over securing dollar inflows and provide breathing room to the economy.
Total liquid foreign reserves held by the country stood at $13.4 billion, said the SBP on Thursday. Net foreign reserves held by commercial banks amounted to $5.7 billion.
“During the week ended on August 26, 2022, SBP’s reserves decreased by $113 million to $7,697.1 million,” the SBP said in a statement.
Alarming level: SBP-held foreign exchange reserves fall $87mn, now stand at $7.8bn
“SBP has received proceeds of $1.16 billion (equivalent of SDR 894 million) from IMF under the Extended Fund Facility (EFF) on August 31, 2022 which would be included in SBP’s FX reserve position for the week ending on September 2, 2022.”
The reserves’ position is critical for Pakistan which is 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.
Since then, the rupee has gained on grounds that Pakistan met all prior conditions of the International Monetary Fund (IMF), a development that helped it secure $1.17 billion of inflow under the Extended Fund Facility (EFF). Additionally, an official source in Abu Dhabi also emphasised the UAE's intention to invest $1 billion in Pakistani companies in various economic and investment sectors.
It also required a combination of an improvement in Pakistan’s trade deficit and realisation of export proceeds to halt a slide that saw the rupee close in on the 240 level in the inter-bank market.
The Pakistani rupee closed at 218.6 level on Thursday following an appreciation of Re0.15 or 0.07%.
The surge came on account of receipt of $1.16 billion from IMF. Moreover, Qatar Investment Authority, one of the world’s largest sovereign funds, is also considering investing $3 billion in Pakistan. The move would lend support to the South Asian nation’s cash-strapped economy.
Saudi Arabia has also announced to invest an amount of $1 billion, in confirmation of the Kingdom's position in support of the economy of Pakistan.