As per the latest data released by the State Bank of Pakistan (SBP) on Thursday, the country’s central bank witnessed a significant drop of more than 10% in its foreign exchange reserves within a week.
On November 4, the SBP’s foreign exchange holdings were recorded at $7.957 billion, showing a sharp decline of $956 million compared to $8.913 billion on October 28. The primary reason behind this substantial decrease in reserves was attributed to servicing external debt.
Notably, the repayment of commercial loans formed a significant portion of the week’s external debt payments, as indicated by the central bank’s statement. However, it was clarified that these loans are currently being refinanced, and it is expected that this will contribute to an increase in foreign exchange reserves in the coming weeks.
Inclusive of net reserves held by banks other than the SBP, the total liquid foreign currency reserves in the country were valued at $13.721 billion, with banks’ net holdings at $5.764 billion, a reduction of $2 million from the previous day.
It’s worth mentioning that the central bank’s reserves experienced a significant boost last week after receiving $1.5 billion from the Asian Development Bank (ADB). Additionally, Pakistan secured approval for a $500 million loan from the Asian Infrastructure Investment Bank (AIIB) on Wednesday, scheduled to be disbursed this month, which is expected to positively impact the country’s reserves.
