Karachi, January 18, 2024 – Pakistan has experienced a decline in foreign exchange reserves by $112 million on a weekly basis, according to an announcement by the State Bank of Pakistan (SBP) on Thursday.
The central bank reported that the country’s foreign exchange reserves slipped to $13.145 billion by the week ending January 12, 2024, compared with $13.257 billion a week ago, i.e., January 5, 2024.
The current reserves stand significantly below the robust levels observed in August 2021, prompting economic analysts to scrutinize Pakistan’s reserve trajectory and delve into the factors contributing to this persistent decline. While concerns loom over the dwindling reserves, analysts anticipate a potential boost in the next reporting period, with anticipated inflows from the International Monetary Fund (IMF).
The SBP indicated that the foreign exchange reserves of the central bank decreased by $128 million, reaching $8.027 billion by the week ending January 12, 2024, compared to $8.155 billion a week earlier. The decline in reserves was attributed to external debt repayments made by the government, shedding light on the challenges Pakistan faces in managing its fiscal obligations.
Despite the dip in the SBP’s reserves, the position of foreign exchange reserves held by commercial banks demonstrated a modest improvement. The reserves of commercial banks increased by $16 million, reaching $5.118 billion at the end of the week, compared to the previous week’s level of $5.102 billion. This suggests a nuanced picture of the overall foreign exchange dynamics in the country.
Economic analysts are keenly observing the upcoming week’s report, which is expected to reflect inflows from the IMF. It is anticipated that these inflows will contribute to an uptick in the total reserves position, providing a temporary respite to the downward trend observed in recent weeks.
The decline in foreign exchange reserves raises concerns about Pakistan’s ability to meet its external financial obligations. As the country grapples with economic challenges, including a trade deficit and geopolitical uncertainties, careful management of reserves becomes crucial for maintaining stability in the currency and overall economic resilience.
While the foreign exchange landscape remains uncertain, stakeholders are hopeful that strategic measures and international financial support will aid in stabilizing and replenishing the reserves in the near future. The coming weeks will be crucial in determining the trajectory of Pakistan’s foreign exchange reserves and the broader economic implications of these fluctuations.
