The central bank reported on Thursday that the State Bank of Pakistan’s (SBP) foreign exchange holdings fell $784 million to an almost four-year low of $6.72 billion for the week ending on December 2.
The SBP reserves were last reported below this amount during the week ending January 18, 2019, when they totalled about $6.64 billion, according to statistics from the central bank. The current value of the net foreign reserves held by commercial banks is $5.867 billion, making the total amount of the nation’s liquid foreign reserves $12.58 billion.
Since taking office in April, the new administration’s priority has been strengthening the country’s foreign exchange reserves. SBP’s reserves, which were formerly close to $10.9 billion, have subsequently decreased by more than $4 billion. The remaining sum of about $6.7 billion is just enough to cover over a month’s worth of imports, according to analysts, who believe the declining reserves may make it harder for the government to repay foreign debts.
SBP Governor Jameel Ahmad stated in a podcast on Thursday that while inflows had stayed at just $4 billion over the previous five months, they were anticipated to increase in the second half of the current fiscal year, which ends in June 2023.
The central bank ascribed the decrease in foreign exchange reserves to a payment of $1 billion against the maturity of sukuk (Islamic bonds). The $6.7 billion reserves, according to a top analyst who asked to remain unnamed, were not determined after the bond payment.
In the interview, Mr. Ahmad said that the SBP gave two commercial banks $1 billion and another $1.2 billion, with the condition that they would lend the same sum to them again in a short period of time.
The Asian Infrastructure Investment Bank (AIIB) announced that their $500 million infusions have countered the State Bank of Pakistan’s (SBP) outflows.
Researchers and analysts are concerned about the nation’s capacity to repay significant foreign debts. The market has been affected by regular worries, and the exchange rate has been unstable during the current fiscal year.