According to figures issued by the State Bank of Pakistan (SBP) on Thursday, the central bank’s foreign exchange reserves declined by $87 million during the week ended on August 19.
Total liquid foreign #reserves held by the country stood at US$ 13.52 billion as of August 19, 2022. For details: https://t.co/WpSgomENV3 pic.twitter.com/LUhlaMa68v
— SBP (@StateBank_Pak) August 26, 2022
According to the central bank’s breakdown of the foreign reserve’s situation, the SBP’s foreign currency reserves were recorded at $7.81 billion, down by $87 million compared to $7.89 on August 19.
Read more: Decline in CAD to $1.2 billion in July- SBP
The country’s total liquid foreign reserves were $13.52 billion as of Thursday, according to the SBP. Commercial banks held $5.71 billion in net foreign reserves.
The SBP attributed this decline in foreign reserves to the “external debt and other payments”.
The position of the reserves is significant for Pakistan, which is dire need for dollar inflows to cover its balance-of-payments requirements. Lack of reserves put tremendous pressure on its currency market, with the rupee posting its worst monthly performance in over 50 years in July.
Rupee continues to decline
The Pakistani rupee continued to report losses against the greenback and was hovering around the 220-221 level in the inter-bank market during the trading session on Friday.
At around 12:00pm, the rupee was being quoted at 220.44, a depreciation of Rs1.03 or 0.46% against the greenback, during intra-day trading.
The drop is reported regardless of the news that the Qatar Investment Authority, one of the world’s largest sovereign funds, is considering investing $3 billion in Pakistan, bolstering the cash-strapped economy of the South Asian country.
According to economists, the rupee will continue to slide until the IMF board authorizes Pakistan’s $1.17 billion tranche payment. The country’s soaring inflation, increasing trade deficit, and dwindling foreign exchange reserves are putting enormous pressure on the Pakistani Rupee.
All eyes are on the revival of International Monetary Fund (IMF) loan programme as it is believed that disbursement of funds by the global lender will pave way towards additional funding from multilateral and bilateral organizations, providing a much-needed boost to the country’s declining foreign reserves.