KARACHI: According to data released by the State Bank of Pakistan (SBP) on Thursday, the central bank’s foreign exchange reserves fell by 22.1% week on week.
foreign currency reserves were $4,343.2 million on January 6, 2023, down $1,233 million from $5,576.5 million on December 30. The SBP attributes the decrease in reserves to external debt repayments.
The country’s total liquid foreign currency reserves, including net reserves held by banks other than the SBP, were $10,187.8 million. Banks’ net reserves totaled $5,844.6 million.
According to details, the pressure on external payments is the reason for the continuous decline in foreign reserves. Due to the repayment of loans obtained from some Arab banks, the reserves have decreased by $1.223 billion in the last week.
Following the recent Geneva Convention, Pakistan hopes to receive aid from friendly countries and donors such as the United Arab Emirates (UAE), Saudi Arabia, and China, which will aid in the improvement of its foreign exchange reserves. Previously, the SBP’s reserves fell by $294 million to $5,821.9 million in the week ending December 23 as Pakistan repaid some of its external debt.
According to research firms, reserves have dropped to their lowest level since April 2014, a more than eight-and-a-half-year low that is barely enough to cover five weeks of imports. Ideally, the country should have enough reserves to cover at least three months of imports.
The domestic market is facing a shortage of US dollars as the International Monetary Fund’s (IMF) loan programme is delayed. Investors are concerned about Pakistan’s ability to meet its foreign debt obligations as reserves are rapidly depleting.