KARACHI – The State Bank of Pakistan (SBP) reported a $12 million increase in its foreign exchange reserves to reach $8.05 billion on a weekly basis, according to a statement released by the central bank on Thursday.
As of August 11, the total liquid foreign reserves of the country were recorded at $13.379 billion, as indicated in the official communication.
In line with data from the central bank, commercial banks held net reserves amounting to $5.3237 billion.
The reason behind the surge in foreign exchange reserves was not explicitly mentioned by the central bank.
These current reserves are deemed sufficient to cover imports for a period exceeding two months.
Notably, last month witnessed a substantial augmentation in SBP reserves, bolstered by financial inflows from the UAE, Saudi Arabia, and the International Monetary Fund (IMF), following the IMF’s endorsement of a $3 billion Stand-by Arrangement (SBA).
Contrary to market expectations, the SBP decided to maintain the key policy rate at 22% the previous month, rather than raising it in line with IMF recommendations. This determination was revealed by SBP Governor Jameel Ahmed subsequent to the Monetary Policy Committee (MPC) meeting.
Explaining the rationale, Governor Ahmed articulated, “Given the decline in inflation, the SBP has opted against a rate hike.”
During a press conference, the head of the central bank stated that the projected growth rate for the upcoming year is anticipated to hover between 2% and 3%. He further elaborated that import restrictions have been completely lifted by the government, leading to a $4.2 billion surge in foreign exchange reserves in July, attributed to funds received from the IMF and other amicable nations.
Governor Ahmed also highlighted that SBP’s foreign exchange reserves now stand at $8.2 billion and are projected to witness further enhancement by December of this year.
The SBP Governor indicated that more loan extensions are anticipated in the following months, while emphasizing that the MPC anticipates a reduction in inflation.
In response to the persistent inflationary pressures, the SBP has incrementally raised its key policy rate by 12.25 percentage points since April 2022.
