Pakistan forex reserves fall to near 3-year low

The State Bank of Pakistans (SBP) foreign currency reserves fell to their lowest level in almost three years at $7.83 billion as of August 5 from $8.385 billion a week earlier on debt payments, data from the central bank showed.

The foreign reserves held by the State Bank of Pakistan dropped by $555 million or 6.6 per cent on a weekly basis due to increased debt payments and a lack of external financing, The News reported.

The central bank’s data showed reserves plunged to their lowest level since October 2019.

Pakistan’s total liquid foreign reserves fell by $648 million or 4.6 per cent to $13.561 billion and those of commercial banks dropped 1.6 per cent to $5.730 billion.

The reserves available with the SBP are enough to cover little over a month’s imports.

The SBP, in a statement, said the reduction in the reverse was due to external debt payments.

“Debt repayments are expected to moderate during the next three weeks of this month,” the central bank said. “In fact, around three-fourth of debt servicing for the month of August was concentrated during the first week.”

The latest forex reserves numbers came as the country is facing dried external funding with the reserves depleting fast amid a stalled $6 billion International Monetary Fund programme, The News reported.

However, analysts see the resumption of the IMF programme and the expected lower current account deficit amid falling imports to help shore up dwindling foreign reserves.

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