Karachi, October 24, 2024 – Pakistan’s foreign exchange (forex) reserves saw a reduction of $94 million in the week ending October 18, 2024, according to data released by the State Bank of Pakistan (SBP) on Thursday. The country’s total forex reserves now stand at $16.017 billion, down from $16.111 billion the previous week, marking a modest but notable decline.
The fall in total reserves can be attributed primarily to a sharp decrease in reserves held by commercial banks. In the week ending October 18, 2024, commercial banks’ forex reserves dropped by $112 million, bringing their total to $4.976 billion. This is a significant decline from the $5.088 billion held in the previous week. The drop in commercial bank reserves overshadowed a slight increase in the official reserves held by the SBP.
While the total forex reserves declined, the SBP’s reserves experienced a small increase of $18 million. As of October 18, 2024, the SBP’s reserves stood at $11.014 billion, compared to $11.023 billion a week earlier. This marginal increase helped to soften the impact of the decline in reserves held by commercial banks.
The decrease in commercial banks’ forex reserves comes at a time when Pakistan continues to face external financial pressures, including rising import costs and ongoing debt repayments. Although the increase in SBP’s reserves suggests some level of stability, the overall decline raises concerns about the country’s ability to maintain adequate forex levels for future needs.
Forex reserves are critical for a country like Pakistan, which relies heavily on imported goods, especially fuel and machinery. A lower reserve level can heighten pressure on the exchange rate and increase inflation, as the country may struggle to meet its international financial obligations. The recent dip in commercial bank reserves may indicate concerns within the private banking sector regarding the country’s economic outlook.
The central bank is expected to continue managing the country’s reserves closely as Pakistan navigates a challenging economic environment marked by fiscal deficits, high inflation, and external debt pressures. The government has been working to secure foreign inflows through bilateral and multilateral channels, which are crucial to stabilizing the country’s foreign exchange reserves and ensuring economic resilience in the coming months.