Karachi (By Muhammad Tashfin): The forex reserves of Pakistan held by the central bank rose by 9.4% on a week-on-week basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.
On February 10, 2023, the Forex reserves of Pakistan were recorded at $3,192.9 million, up by $276 million compared to $2,916.7 million on February 3.
The central bank gave no reason for the rise in foreign exchange reserves.
However, market talk suggests that the foreign exchange reserves increased after the central bank bought US dollars from the inter-bank market.
In recent days, the flow of foreign money in Pakistan’s market has surged in comparison to consumer demand. “Surplus supply have prompted the central bank to intervene (by purchasing dollars to boost currency reserves),” a market observer said.
Exporters are selling US dollars in the market amid speculations that the currency will stabilise around Rs265-275 per dollar. Similarly, the influx of worker remittances through official channels has grown following the rupee’s 16.5% depreciation in the previous two weeks.
The country’s total liquid foreign currency reserves, comprising net reserves held by banks other than the SBP, were $8,702.2 million.
Yet, market speculation implies that the central bank’s foreign exchange reserves climbed after the central bank purchased US dollars from the interbank market.
Commercial banks owned a total of $5,509.3 million in net reserves.
According to analysts, the greatest reason for the ongoing drop in the country’s foreign currency reserves over the past several weeks was the pressure of external payments.
But, resuming the IMF loan programme will open the way for the release of the next $1.1 billion tranche in a few weeks or about a month, as well as unlocking a couple of billions more from other multilateral and bilateral creditors, including friendly countries.
It will help to stabilize the country’s foreign exchange reserves, avert the imminent possibility of default, and improve the country’s ability to pay for imports and repay foreign debt.
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