Karachi, October 26, 2023 – Pakistan has witnessed a drop in foreign exchange reserves by $257 million on a weekly basis, as reported in an official statement issued on Thursday.
The State Bank of Pakistan (SBP) revealed that the country’s foreign exchange reserves fell to $12.656 billion as of the week ended October 20, 2023, down from $12.913 billion the previous week (October 13, 2023).
This decline underscores a noteworthy shift, as Pakistan’s foreign exchange reserves have witnessed a substantial decrease from their peak level, recorded in August 2021 when they reached a robust $27.2 billion. The current significant drop in reserves has raised concerns about Pakistan’s ability to meet its import requirements effectively and maintain the stability of the Pakistani rupee in the international currency market.
Specifically, the official foreign exchange reserves held by the central bank, the SBP, also saw a weekly decrease of $220 million. The SBP’s foreign exchange reserves now stand at $7.494 billion, compared to $7.714 billion in the previous week.
The SBP attributed this decline in foreign exchange reserves to the government’s external debt payments. These payments have put pressure on the country’s already diminishing reserves.
Moreover, commercial banks in Pakistan have also reported a decline in their foreign exchange reserves, with a drop of $38 million. The commercial banks’ foreign exchange reserves now amount to $5.161 billion, down from $5.199 billion the previous week.
Financial analysts have raised concerns that this fall in foreign exchange reserves could exert pressure on the stability of the Pakistani Rupee (PKR). It is noteworthy that the PKR had been relatively stable for approximately one and a half months but recently began to experience depreciation.
The decline in foreign exchange reserves, coupled with the ongoing depreciation of the rupee, underscores the importance of implementing prudent financial measures to manage the country’s economic challenges and maintain exchange rate stability.
Market participants and policymakers will be closely monitoring the situation to assess the impact of these developments on Pakistan’s economy and currency market. It is crucial for the country to address these challenges effectively and explore strategies to bolster its foreign exchange reserves and ensure long-term economic stability.
SBP Weekly Foreign Exchange Reserves Increase by $67 Million
