Pakistan’s Net Forex Reserves Dip $31 Million on Weekly Basis

Pakistan’s Net Forex Reserves Dip $31 Million on Weekly Basis

Karachi, January 9, 2025 – Pakistan’s net foreign exchange (forex) reserves experienced a decline of $31 million during the week ending January 3, 2025, according to the State Bank of Pakistan (SBP). This reduction highlights ongoing pressures on the country’s external account as inflows and outflows continue to fluctuate.

The total forex reserves of Pakistan fell to $16.378 billion by the week’s close, down from $16.409 billion on December 27, 2024. The SBP, which monitors and manages the country’s foreign exchange holdings, reported that this drop underscores the need for prudent management of resources to maintain economic stability.

The SBP’s own reserves recorded a decrease of $16 million, settling at $11.695 billion for the week ending January 3, 2025. This is a decline from the previous week’s figure of $11.711 billion. As the central bank, the SBP’s reserves are vital for meeting external debt repayments and maintaining stability in the local currency market.

In addition, forex reserves held by commercial banks also saw a reduction of $15 million, dropping to $4.683 billion compared to $4.698 billion a week earlier. The decline in these reserves reflects decreased inflows from private sector sources, further adding to the overall contraction in Pakistan’s forex reserves.

Economic experts have expressed concerns over the consistent downward trend in forex reserves, emphasizing the critical role of the SBP in addressing these challenges. Factors such as external debt repayments, rising import bills, and lower foreign investment inflows have been cited as key contributors to the decline. The SBP’s efforts to secure additional financial support remain essential for maintaining reserve adequacy.

The SBP has reiterated the importance of forex reserves in stabilizing Pakistan’s exchange rate, managing inflationary pressures, and ensuring the availability of essential imports such as food and fuel. Strengthening these reserves remains a cornerstone of the country’s economic resilience.

To address the challenges, policymakers are focusing on increasing remittance inflows, attracting foreign investments, and securing assistance from bilateral and multilateral partners. The SBP’s role in implementing these strategies will be crucial in mitigating external vulnerabilities and supporting sustainable economic growth.

The latest dip in reserves reported by the SBP underscores the urgency for reforms and effective resource management to bolster Pakistan’s financial stability in the face of persistent external challenges.