KARACHI: Pakistan’s official foreign exchange reserves have fallen to an alarming level of $5.82 billion by week ended December 23, 2023, according to data released on Thursday.
The official foreign exchange reserves of the State Bank of Pakistan (SBP) fell by $294 million to $5.822 billion by week ended December 23, 2022 as compared with $6.116 billion a week ago i.e. December 16, 2022.
READ MORE: Pakistan’s official forex reserves plummet to about one month import cover
The present level of the official reserves have created default like situation as the country may unable to pay for foreign trade in coming days.
The import bill of the country for the month of November 2022 was recorded at $5.18 billion, according to Pakistan Bureau of Statistics (PBS).
READ MORE: Pakistan foreign exchange reserves ease to $12.57 billion
This shows the official foreign exchange reserves of the country have capacity to provide import cover for only 1.2 months. The benchmark foreign exchange reserves of a central bank should be at a level to provide three months import cover.
The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP dropped by $14.324 billion.
The total foreign exchange reserves of the country slipped by $293 million to $11.707 billion by week ended December 23, 2022 when compared with $12 billion a week ago.
READ MORE: Pakistan official forex reserves plunge multi years low to $6.72 billion
The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $15.521 billion.
The foreign exchange reserves held by commercial banks however remained flat at $5.885 billion by week ended December 23, 2022 as compared with $5.884 billion a week ago.
The critical low level of the foreign exchange reserves may further put pressure on the exchange rate, said analysts at KASB Research.
READ MORE: SBP foreign exchange reserves fall to $7.5 billion
Plummeting foreign exchange reserves amidst high debt servicing obligations will likely exert considerable pressure on the Pak Rupee (PKR).
As per the SBP, REER has again crossed the 100 mark, driven by Pakistan’s high inflation environment.
As debt servicing exerts additional pressure on the PKR, the analysts believed the currency may depreciate to PKR 265 to the US dollar by end of the current fiscal year.
