Forex reserves boost $112 million

KARACHI:

Pakistan’s foreign exchange reserves, held by the State Bank of Pakistan (SBP), strengthened by $112 million in the week ended August 23, 2024 as they jumped to a six-week high of $9.4 billion, apparently due to buying by central bank the dollar from local markets.

Despite a $2.7 million drop in nominal reserves of commercial banks compared to the previous week, the country’s total reserves hit a 26-month high of $14.78 billion, according to the SBP’s weekly update released on Thursday. The Pakistani currency, however, was not boosted by the rise in reserves as it depreciated for the second consecutive day, falling by Rs 0.19 to a one-week low of Rs 278.64 to the dollar.

The rupee extended its slide on speculation that Pakistan’s export earnings could be hit by a jump in the cost of producing goods due to excessive energy tariffs and the imposition of new taxes. The SBP’s reserves continued to improve over the past five weeks, rising cumulatively by $376.2 million.

Although the central bank did not give a reason for the increase in reserves in its weekly update, senior bank officials had said in July that they were buying US dollars from local foreign exchange markets to replenish reserves. Economic experts revealed that the supply of foreign exchange remained higher than the demand for imports. The central bank buys the surplus to repay the country’s maturing foreign debt and increase its reserves.

Strong inflows of workers’ remittances and rising export earnings have kept the supply of US dollars higher than their demand from importers, although imports are gradually increasing.

The SBP predicted in July that its reserves would jump by $4 billion to $13 billion by the end of the current fiscal year in June 2025. According to the weekly update, foreign reserves held by commercial banks fell by 2.7 million dollars and amounted to 5.37 billion dollars. The country’s total reserves increased by $108.9 million to $14.77 billion.

On Thursday, gold fell by Rs 2,200 to Rs 261,500 per tola (11.66 grams) against a rise of $4 to $2,516 per ounce (31.10 grams) in the international market.

All Pakistan Saraf Gems and Jewelers Association reported gold rates after a three-day hiatus during which the market remained closed for different reasons.