Pakistan Forex reserves deplete even further to $5.8b

Pakistan Foreign Reserves

KARACHI: The foreign exchange reserves held by the central bank fell by 4.8% on a week-on-week basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.

On December 23, the reserves held by the SBP were recorded at $5,821.9 million, down $294 million as compared with $6,116.2 million on December 16.

According to the SBP the decrease in reserves came due to an external debt repayment. Overall, the liquid foreign currency reserves held by the country, including the net reserves held by banks other than the SBP, stood at $11,707.2 million. Net reserves held by banks amounted to $5,885.3 million.

In the week ended on December 16, 2022, SBP’s reserves decreased by $584 million to $6,116.2 million due to external debt repayment.

Local research houses have said the reserves have hit their lowest level since April 2014, meaning they have depleted to an eight-year and nine-month low since then – hardly enough to facilitate five-weeks’ worth of imports for the country compared to the minimum requirement of a three-month cover.

The country is facing an economic crisis with a shortage of US dollars in the local market and a delay in the resumption of the IMF loan programme.

Earlier, elaborating on the wide gap of Rs30-35 in the value of the rupee in interbank and black currency market at around Rs255-260, Finance Minister Ishaq Dar said that the smuggling of foreign currency, wheat and fertiliser have been weighing on the rupee-dollar parity.