KARACHI: Pakistan’s foreign exchange reserves experienced a significant decline of $173 million, settling at $13.59 billion for the week ending September 30, 2022, according to data released by the State Bank of Pakistan (SBP) on Thursday.
The country’s reserves stood at $13.762 billion just a week earlier, on September 23, 2022. This marks yet another decrease in the nation’s reserves, which had reached an all-time high of $27.228 billion on August 27, 2021. Since then, Pakistan’s reserves have plunged by $13.639 billion, reflecting the ongoing challenges in managing its external finances.
The SBP’s own reserves fell by $106 million during the same period, dropping from $8 billion to $7.9 billion. The central bank attributed this decline primarily to external debt repayments, including interest payments on Eurobonds. The SBP’s reserves had peaked at $20.146 billion on August 27, 2021, but since then, they have declined by a staggering $12.246 billion.
Experts warn that the continuous depletion of Pakistan’s foreign exchange reserves could undermine the recent appreciation of the Pakistani Rupee (PKR) against the US dollar. Over the past 10 consecutive trading sessions, the PKR has strengthened, benefiting from strict monitoring of foreign currency transactions. During this period, the rupee gained 17.77 in value against the dollar, providing a brief respite for Pakistan’s economy.
Earlier this month, Pakistan’s central bank received $1.166 billion from the International Monetary Fund (IMF) under the Extended Fund Facility (EFF). This inflow temporarily bolstered SBP’s reserves, raising them to $8.8 billion. However, external debt obligations have since eroded a significant portion of this gain.
Meanwhile, foreign exchange reserves held by Pakistan’s commercial banks also witnessed a decline. These reserves fell by $67 million, dropping to $5.689 billion for the week ending September 30, 2022, compared to $5.756 billion a week earlier.
With falling reserves, Pakistan continues to face mounting pressure to stabilize its economy, ensure exchange rate stability, and meet its external financing needs. Economic experts emphasize the urgent need for measures to address the country’s balance-of-payments crisis and rebuild foreign exchange reserves.