FX reserves hit 8-month low

November 26, 2021 (MLN): Foreign exchange reserves held by the country plummeted to an eight-month low at $22.77 billion during the week ended on November 19, 2021, due to an outflow of $961 million on account of debt repayments, weekly data released by the State Bank of Pakistan showed on Thursday.

The country’s total reserves (central bank and commercial banks) decline by $1.04bn during the week.

“The total liquid foreign reserves held by the country stood at US$ 22,773.8 million on 19-November-2021 … During the week ended 19-November-2021, SBP reserves decreased by US$ 691 million to US$ 16,254.1million, mainly due to external debt repayment,” the SBP said in its press release.

Meanwhile, foreign exchange reserves held by the SBP fell by$691m to $16.25bn – lowest since June-end. On the other hand, reserves held by the commercial banks also declined by 86.2 million during the week under review to $6.51bn.

With the fall in reserves in the background, the USD at the interbank reached to historic high crossing the Rs176 mark at the interbank up by 1.12 rupees.

The government is expecting inflows from the International Monetary Fund (IMF) to the tune of $1bn once the Extended Fund Facility (EFF) is approved by the fund’s Executive Board in January next. In addition, media sources have claimed that the government is also planning to issue a $1bn Sukuk next week in order to bolster its forex reserves.

However, despite a lapse of three weeks since the announcement, the SBP has not received a $3bn deposit as promised by the Saudi Authorities.

Information Minister Fawad Chaudhary on Thursday said that all legal formalities on a $3bn loan by Saudi Arabia have been completed, and the government will receive a deposit of said amount in the next week.
These inflows are likely to keep USD’s gain against the rupee in check.

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