Foreign exchange: SBP’s reserves slip by $8.1m to $10.23b2 min read

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Foreign Exchange Reserves
Central bank cites no reason for increase. PHOTO: REUTERS
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KARACHI:  Foreign exchange reserves held by the central bank decreased 0.08% on a weekly basis, according to data released on Thursday.

On August 24, the foreign currency reserves held by the State Bank of Pakistan (SBP) were recorded at $10,226.7 million, down $8.1 million compared with $10,234.8 million in the previous week.

Overall, liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, stood at $16,685.1 million. Net reserves held by banks amounted to $6,458.4 million.

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Four weeks ago, China reportedly agreed to immediately give a loan of $2 billion to Pakistan, a move meant to arrest the slide in foreign currency reserves and provide much-needed breathing space for the new government.

Of the agreed amount, $1 billion had already been transferred to the central bank account. According to officials in the Ministry of Finance, the loan will be categorised as official bilateral inflow.

Also Read: Pakistan receives $439m in foreign loans in July

Earlier, the reserves had dipped to an alarmingly low level at $9.06 billion, forcing the central bank to let the rupee depreciate massively on four separate occasions since December 2017, and sparking concerns about the country’s ability to finance a hefty import bill as well as meet debt obligations in coming months.

In April, the SBP’s reserves had increased $593 million due to official inflows.

A few months ago, the foreign currency reserves surged due to official inflows including $622 million from the Asian Development Bank (ADB) and $106 million from the World Bank. The SBP also received $350 million under the Coalition Support Fund (CSF).

In January, the SBP made a $500-million loan repayment to the State Administration of Foreign Exchange (SAFE), China.

Pakistan also raised $2.5 billion in November 2017 by floating dollar-denominated bonds in the international market in a bid to shore upofficial reserves.

(This news/article originally appeared in The Express Tribune on August 30th, 2018)

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