SBP’s forex reserves rise more than one month import cover

SBP’s forex reserves rise more than one month import cover

KARACHI: Foreign exchange reserves of the State Bank of Pakistan (SBP) have been increased to a level for providing more than one month import cover, according to official data released on Thursday.

The official reserves of the SBP increased by $487 million to $4.301 billion by week ended March 03, 2023 as compared with $3.814 billion a week ago i.e. February 24, 2023.

READ MORE: SBP’s weekly forex reserves up by $556 million

The SBP attributed the rise in its official reserves to inflows of $500 million as commercial loan from China.

After many week the official reserves of the central crossed one month import cover. The import bill of the country during the month of February 2023 was recorded at $4 billion.

Ideally a central bank should have a level of foreign exchange reserves that is equal to three-month of import payment by a country.

READ MORE: SBP’s foreign exchange reserves inch up to reach $3.26 billion

The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by the week ended August 27, 2021. Since then the official reserves of the SBP dropped by $15.845 billion.

The total foreign exchange reserves of the country have also increased by $486 million to $9.754 billion by week ended March 03, 2023 as compared with $9.268 billion a week ago.

READ MORE: Foreign exchange reserves of Pakistan rise to $8.70 billion

The country’s foreign exchange reserves hit an all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $17.474 billion.

On the other hand, the foreign exchange reserves of the commercial banks remained flat to $5.453 billion by the week ended March 03, 2023 when compared with $5.454 billion a week ago.

READ MORE: Pakistan’s official foreign exchange reserves fall below $3 billion or nine-year low

Pakistan is facing massive shortfall of foreign exchange to support its balance of payment. The government is striving hard to strike a deal with the International Monetary Fund (IMF) for obtaining a tranche of $1.2 billion under Extended Fund Facility (EFF).

However, in a positive development about $700 million from China were transferred previously, which improved stock of the foreign exchange reserves.