KARACHI: The State Bank of Pakistan’s (SBP) foreign exchange reserves hardly increased in the absence of any foreign inflow, while commercial banks saw a notable decline in the week ending May 17.
The central bank announced on Thursday that its reserves had increased by $22 million to $9.157 billion during the course of the week. The SBP’s deliberate dollar purchases from the interbank market are reflected in this rising trend in reserves.
The IMF requested that the SBP increase its foreign exchange reserves to $9 billion before to delivering the last $1.1 billion tranche under the Stand-By Arrangement. By the end of June, the reserves might rise to $11 billion, according to the government.
Currency analysts following the developments think Pakistan still needs to meet a number of prerequisites before reaching a Saff-Level Agreement in the last round of negotiations with the IMF for a fresh bailout.
However, during the last fiscal year, expectations for foreign investment did not materialize. International investors have not yet expressed significant interest in Pakistan International Airline (PIA), despite a lucrative offer to sell the airline. Political parties are posing concerns about potential issues for the nation’s defense if the national airline is sold along with airports.
Dollar accessibility
Open market currency dealers reported strong inflows in April and May. They sold roughly $400 million in April, and this month has seen more of the same.
But during the week that concluded on May 17, the commercial banks reported a $63 million decline in their foreign exchange reserves to $5.4 billion.
During the same week, the nation’s overall reserves decreased by $41 million to $14.6 billion. This sum, according to analysts, could barely cover imports for 1.73 months. Remittances and foreign direct investments have increased recently in the nation, however the banking industry did not view this as noteworthy.
