Karachi, March 7, 2024 – The State Bank of Pakistan (SBP) announced a notable decrease of $54 million in its weekly foreign exchange reserves, according to an official statement released on Thursday.
This development comes as the official reserves held by the SBP dropped to $7.896 billion by the week ending March 1, 2024, compared to $7.950 billion recorded a week earlier, as of February 23, 2024.
The primary reason behind this decline, as stated by the SBP, is the repayment of debt by the federal government. Despite efforts to bolster the nation’s economic stability, debt repayment has taken a toll on the foreign exchange reserves held by the central bank.
In contrast to the SBP’s decrease, commercial banks in Pakistan experienced a rise in their foreign exchange reserves. The reserves held by these banks increased by $35 million, reaching $5.124 billion by the week ended March 1, 2024, compared to $5.089 billion recorded just a week before. This surge in commercial bank reserves may indicate a shift in the distribution of foreign exchange assets within the country.
However, when combining the official reserves and those of commercial banks, the net foreign exchange reserves of Pakistan witnessed a decrease of $19 million on a weekly basis. As of March 1, 2024, the combined reserves stood at $13.02 billion, compared to $13.039 billion recorded a week earlier. This dip raises concerns about the overall foreign exchange stability of the country, as it indicates a decline in the available reserves to cushion against economic uncertainties.
It is essential to note that Pakistan had achieved historic levels of foreign exchange reserves, reaching $27.227 billion in August 2021. The current decrease in reserves highlights the challenges the country faces in maintaining its foreign exchange position, possibly stemming from economic pressures and debt obligations.
Analysts and financial experts will be closely monitoring the situation to assess the impact of these developments on Pakistan’s economic landscape. The declining foreign exchange reserves raise questions about the government’s ability to manage debt repayment while ensuring the stability of the country’s financial system.
The SBP and relevant authorities may need to implement strategic measures to address the ongoing challenges and restore confidence in Pakistan’s foreign exchange management. As global economic dynamics continue to evolve, vigilance and adaptability will be crucial for Pakistan to navigate these uncertainties and sustain a resilient economic framework.
