Following contributions from the International Monetary Fund (IMF), the State Bank of Pakistan’s (SBP) foreign exchange reserves exceeded $9 billion and hit a two-year high.
The foreign exchange reserves increased to $9.120 billion at the conclusion of the week on May 3, according to the most recent statistics regarding the reserves that the central bank issued on Thursday.
According to a bank statement, “the SBP reserves increased by $1.114 billion to $9.120 billion during the week, mainly due to the receipt of $1.1 billion from the IMF as the final tranche under the Stand-By Arrangement (SBA)”. With $5.338 billion held by commercial banks, the nation’s total foreign exchange reserves came to $14.458 billion.
Midway through July 2022, the SBP’s reserves stood at $9 billion, and ever since, they have been steadily declining. The State Bank’s foreign exchange reserves dropped to $4.4 billion in June 2023, putting the nation on the verge of a sovereign default by the conclusion of FY23.
At the end of June 2023, the nation and the IMF signed a $3 billion SBA that would last nine months. However, in order to control the outflow of dollars, the SBP severely limited imports and the repatriation of profits from foreign investments.
But the SBA’s clearance also made room for influxes from other directions. China rolled over a number of payments that were due in CY2023, while Saudi Arabia and the United Arab Emirates maintained billions of dollars in the State Bank’s account.
The rupee was severely under pressure during the period of political and economic unrest, falling to Rs306 versus the US dollar in the interbank market and trading as high as Rs340 on the open market. Following the implementation of a crackdown to halt dollar smuggling, the exchange rate stabilized.
With sporadic oscillations, the exchange rate has remained steady between Rs278 and Rs280 for the past four months.
According to a State Bank of Pakistan data released on Thursday, remittances from Pakistanis living abroad rose by 28% in April.
