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Pakistan’s forex reserves fall $956m to $7.96b

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2 years ago

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  • Forex reserves held by banks reduce by $2 million.
  • Import cover sufficient for only 1.16 months.
  • Fresh inflows expected by end of November.

KARACHI: State Bank of Pakistan’s (SBP) foreign exchange reserves saw a massive erosion of $956 million, falling to $7.96 billion, dented by debt payments, central bank data released on Thursday showed.

Total liquid foreign reserves held by the country stood at $13.72 billion. Net foreign reserves held by commercial banks clocked in at $5.76 billion after a reduction of $2 million.

“During the week ended on November 4, 2022, SBP’s reserves decreased by $956 million to $7,957.0 million due to external debt servicing,” said the State Bank of Pakistan (SBP) in a statement.

This leaves the country with an import cover for 1.16 months only.

“Major external debt repayments executed during the week include repayment of government’s commercial loans,” it said.

The SBP further said that refinancing of these loans was in the process which would improve foreign exchange reserves in the coming weeks”.

The reserves are crucial for the country amid the current situation, where it has to also import edibles after the cataclysmic floods devastated the agricultural crops and dealt damages estimated at over $30 billion.

Earlier this week, Finance Minister Ishaq Dar announced the Asian Infrastructure Investment Bank (AIIB) would extend $500 million as co-financing for a development programme in Pakistan.

“These funds will be received by the State Bank of Pakistan within November 2022,” Dar tweeted, as the cash-strapped nation desperately seeks financing to cushion the impact of floods.

These funds would help boost forex reserves held by the central bank.

In October, The Asian Development Bank (ADB) also approved $1.5 billion in financing to help Pakistan provide social protection, promote food security, and support employment for its people amid devastating floods and global supply chain disruptions.

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Robust activity lets PSX climb above 115,000 level again.

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On Friday, the Pakistan Stock Exchange (PSX) resumed its upward trend, crossing 115,000 points once more.

The PSX had strong action in the morning session, as the KSE-100 index increased by 1,000 points to 115,138.

The notoriously volatile PSX closed Thursday at 114,037 points, up 594 points.

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Meanwhile, in the interbank market this morning, the US dollar fell 7 paisas to Rs278.65 against the Pakistani rupee.

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SBP will announce monetary policy on January 27.

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The State Bank of Pakistan (SBP) will release its monetary policy on Monday.

The Monetary Policy Committee (MPC) of the SBP will convene on the first day of the following week to make decisions on monetary policy.

The Monetary Policy decision will be announced by Governor SBP Jameel Ahmad at a news conference on the same day after the MPC meeting, according to an official release.

In December, the central bank reduced policy rates by 200 basis points (bps) to 13 percent.

“In November 2024, headline inflation fell to 4.9 percent year on year, meeting the MPC’s estimates. This decrease was mostly caused by the ongoing decline in food inflation and the phasing out of the impact of the gas tariff increase in November 2023,” SBP stated in an official release.

“However, the Committee noted that core inflation, at 9.7 percent, is proving to be sticky, while consumer and business inflation expectations remain volatile.” To that end, the Committee restated its previous assessment that inflation may remain volatile in the short term before stabilizing within the target range.

“At the same time, growth prospects have slightly improved, as evidenced by a recent increase in high-frequency indicators of economic activity.” Overall, the Committee concluded that its approach of gradual policy rate decreases is keeping inflationary and external account pressures under control while promoting long-term economic growth.

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Finance Minister Meets With World Leaders at World Economic Forum in Davos

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During his attendance at the World Economic Forum in Davos, Switzerland, Finance Minister Muhammad Aurangzeb has met with officials of organisations and leaders of many nations.
Bangladesh’s Chief Advisor, Muhammad Younas, met with Mohammad Aurangzeb.
On the fringes of the World Economic Forum’s Annual Meeting 2025 Opening Banquet, there was an informal meeting.
Additionally, the Finance Minister met with Anwar Ibrahim, the Prime Minister of Malaysia.
Both leaders discussed economic cooperation and bilateral ties.
Muhammad Aurangzeb also had a meeting with Dp World’s Rizwan Soomro and Yuvraj Narayan.
They talked about how to strengthen Pakistan’s logistics and infrastructure systems to support trade.
“The Pakistani government is committed to advancing joint projects and values partnerships in both business-to-business and business-to-government cooperation,” the finance minister added.

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