KARACHI: Pakistan’s foreign exchange reserves held by the State Bank of Pakistan (SBP) have surged past $11 billion for the first time in over 30 months, marking a notable increase of $215 million in the week ending October 11, 2024. This growth is part of a 12-week upward trend, during which reserves have risen by approximately $2 billion, bolstered significantly by the arrival of the International Monetary Fund’s (IMF) first tranche under a new $7 billion loan program in late September.
This increase has also positively impacted the Pakistani rupee, which appreciated by Rs0.05 to Rs277.79 against the US dollar in the inter-bank market, ending a three-day decline.
While the SBP did not specify the reasons for the surge, it recently indicated its strategy of purchasing US dollars from local markets to service foreign debt and enhance reserves. The latest figures suggest that Pakistan’s import cover has now expanded to over two months, a significant improvement from less than one month in June 2023.
SBP Governor previously projected that reserves could reach $13 billion by the end of the fiscal year in June 2025, attributing this to robust worker remittances and improved export earnings. The market currently has a sufficient supply of foreign currency for imports, allowing the SBP to absorb excess supply to replenish its reserves.
Conversely, reserves held by commercial banks fell by $150.4 million to $5.08 billion, resulting in total reserves of $16.11 billion. The stability of the Pakistani rupee is expected to continue, supported by anticipated trade agreements, particularly with China and Russia, which could reduce dependence on the US dollar.
Additionally, inflows through the Roshan Digital Account (RDA) rose by $168 million in September, contributing to the stabilization of foreign exchange reserves despite recent withdrawals.
