Karachi, October 31, 2024 – Pakistan’s foreign exchange reserves posted a modest uptick, increasing by $32 million over the past week, as revealed by the latest data from the State Bank of Pakistan (SBP) on Thursday.
By the close of the week ending October 25, 2024, total reserves reached $16.049 billion, inching up from $16.017 billion reported the previous week on October 18.
The incremental rise in forex reserves primarily stems from a $115 million increase in SBP’s official reserves, which grew to $11.156 billion by October 25, up from $11.041 billion a week prior. This marks a steady, though measured, enhancement of Pakistan’s foreign exchange reserves, providing a buffer in a challenging economic landscape marked by global market volatility.
On the other hand, forex reserves held by commercial banks saw a reduction of $83 million, slipping to $4.893 billion from $4.976 billion the previous week. Analysts highlight that this decline within the commercial banking sector reflects recent pressures in local currency liquidity, as businesses ramp up international payments and imports, a common trend nearing year-end fiscal closures.
While the overall increase in reserves is small, it signals resilience in Pakistan’s financial ecosystem amidst external economic headwinds. Market analysts underscore that sustaining reserve levels is crucial for maintaining currency stability, particularly as Pakistan navigates an environment of rising dollar demand driven by trade imbalances and external debt obligations.
Economists suggest that the SBP’s ability to incrementally bolster reserves, despite pressures on the currency, contributes to a more positive macroeconomic outlook. Such gains are seen as essential to supporting the rupee and managing inflationary trends linked to currency depreciation. Additionally, this incremental reserve increase could bolster investor confidence by demonstrating the SBP’s proactive approach to building financial defenses.
The SBP’s recent measures have also underscored its commitment to prudent monetary policy, aimed at stabilizing currency volatility and promoting macroeconomic stability. With remittance inflows from Pakistan’s diaspora and export revenues performing steadily, analysts are hopeful that Pakistan’s foreign exchange position could see gradual improvements. However, they caution that regional and global economic trends, along with internal fiscal management, will play pivotal roles in shaping the trajectory of these reserves.
While the modest reserve growth is encouraging, maintaining this momentum will require careful fiscal strategies and strengthened economic policies. The SBP’s future focus on balancing monetary support with effective reserve management will be key to navigating the complexities of the international financial landscape and securing sustained economic resilience for Pakistan.