KARACHI: The central bank announced on Thursday that during the week ending on May 10, the foreign exchange reserves of State Bank and commercial banks increased dramatically.
The State Bank’s reserves decreased by $152 million to $5.491 billion, while commercial banks’ reserves increased by the same amount to $9.135 billion.
The IMF gave the central bank $1.1 billion this month, the final installment in a $3 billion Stand-By Arrangement. It increased the overall reserves by over $9 billion. The IMF agreed that reserves should reach $9 billion by the conclusion of the current fiscal year, FY24. It appears that the IMF was able to assist in meeting the requirement.
Reserves held by commercial banks have increased significantly as a result of increased inflows and decreased outflows. This week, the nation’s reserves totaled $14.626 billion.
The amount of foreign exchange held by commercial banks has increased by $152 million, while SBP has added $15 million
Researchers estimate that the State Bank’s present reserves would hardly cover imports for seven weeks, or over two months. This doesn’t bode well for economists. They view as reasonable reserves sufficient to cover three months’ worth of imports.
Even if it has significantly decreased recently, the trade imbalance for the first ten months of the current fiscal year was still $19.7 billion. A modest current account deficit, however, will help the government much in its discussions with the IMF over a different package.
The CAD dropped from over $4 billion in the previous fiscal year to just half a billion dollars in the first ten months of FY24. According to certain specialists who are actively monitoring the situation, the deficit may increase in May and June.
