Tag: State Bank of Pakistan

KARACHI: Official foreign exchange reserves of Pakistan have reduced to provide about one month import cover, according to data released by the State Bank of Pakistan (SBP).

The official foreign exchange reserves of the State Bank fell to $6.12 billion by week ended December 16, 2022.

READ MORE: Pakistan foreign exchange reserves ease to $12.57 billion

Whereas, 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).

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.

READ MORE: Pakistan official forex reserves plunge multi years low to $6.72 billion

The central bank said that its foreign exchange reserves fell by $584 million to $6.12 billion by week ended December 16, 2022 when compared with $6.70 billion a week ago i.e. December 09, 2022.

State Bank attributed the decline in official reserves to external debt repayment. The current level of reserves witnessed multi years low as the SBP reserves were seen at $7 billion in April 2014.

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 $14.026 billion.

The total foreign exchange reserves of the country slipped by $570 million to $12 billion by week ended December 19, 2022 when compared with $12.57 billion a week ago.

READ MORE: SBP foreign exchange reserves fall to $7.5 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 $15.228 billion.

The foreign exchange reserves held by commercial banks however recorded a nominal increase of $10 million to $5.88 billion by week ended December 16, 2022 as compared with $5.87 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: Pakistan official reserves fall to around 1 ½ months import coverage

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.