SBP’s foreign exchange reserves drop below $8bn

The State Bank of Pakistan’s foreign exchange reserves have fallen by $125 million to $7.930 billion. This is due to ongoing debt repayments. The decline in reserves is a cause for concern, as it could impact Pakistan’s ability to import essential goods and services.

As of the week ending on August 18, Pakistan’s total foreign exchange reserves stood at $13.84 billion. The central bank’s reserves fell by $12.50 million to $7.935 billion, while commercial banks’ reserves increased by $100 million to $5.31 billion.

In July, the State Bank of Pakistan received an initial installment of $1.2 billion from the International Monetary Fund (IMF). This helped to boost reserves. However, reserves are now facing pressure due to debt repayments, rising import payments, and a lack of fresh inflows.

Pakistan’s current account deficit widened to $809 million in July, the highest since October 2022. This was due to a decline in exports and an increase in imports.

The Pakistani rupee also reached a new record low against the US dollar on Thursday, closing at 300.22. This is a cause for concern, as it could make imports more expensive and hurt the economy.