Karachi, August 10, 2023 – Pakistan’s latest foreign exchange reserves have experienced a notable decline, reaching $13.34 billion for the week ending on August 4, 2023, as reported by the State Bank of Pakistan (SBP) on Thursday.
This decline of $125 million from the previous week’s position of $13.464 billion (as of July 27, 2023) has raised concerns about Pakistan’s capacity to manage its import requirements and uphold the stability of the Pakistani rupee in the international currency market.
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It’s essential to highlight that the current level of foreign exchange reserves stands significantly below the peak reached in August 2021, when the reserves were a robust $27.2 billion. The recent decline in reserves underscores potential challenges in maintaining the nation’s economic stability.
The official foreign exchange reserves maintained by the State Bank of Pakistan have recorded a decline of $111 million, decreasing to $8.043 billion by the week ending August 4, 2023, in comparison to the previous week’s total of $13.464 billion. Similarly, commercial banks also experienced a reduction of $14 million in their foreign exchange reserves during the same period.
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To counterbalance this decline, Pakistan has received substantial financial support from friendly nations and the International Monetary Fund (IMF), aimed at boosting the foreign exchange reserves. However, the pressure of debt repayments has, thus far, outweighed these inflows, leading to the continued decline in reserves.
The decrease in foreign exchange reserves raises important questions about Pakistan’s fiscal management and its ability to ensure economic stability amidst ongoing challenges. It remains to be seen how Pakistan will address these concerns and work towards bolstering its foreign exchange reserves in the face of global economic fluctuations.
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