SBP’s foreign exchange reserves drop below $8bn

KARACHI: The foreign exchange reserves of the State Bank of Pakistan have declined by $125 million to reach $7.930 billion due to ongoing debt repayments. The downward trend in domestic foreign exchange reserves persists.

As of the week ending on August 18, the combined foreign exchange reserves of the nation stood at $13.84 billion. The Central Bank’s reserves reduced to $7.935 billion, experiencing a decrease of $12.50 million. Concurrently, commercial banks held reserves amounting to $5.31 billion.

In July, the State Bank of Pakistan (SBP) witnessed an increase in reserves due to the reception of the initial installment, approximately $1.2 billion, from the International Monetary Fund (IMF) following the approval of a new $3-billion Stand-By Arrangement. However, the central bank’s reserves are currently facing pressure due to obligations related to debt repayment, a surge in import payments after the relaxation of restrictions, and a lack of fresh inflows.

After maintaining a surplus over four consecutive months, Pakistan’s current account experienced a deficit of $809 million in July, marking the highest deficit since October 2022.

Simultaneously, the Pakistan rupee reached a new record low, slipping below the 300 mark against the US dollar for the first time in the inter-bank market on Thursday. It concluded at 300.22, reflecting a decline of Re0.58 or 0.19%, as reported by the State Bank of Pakistan.