KARACHI: A massive exodus of$ 869 million week-on-week substantially for debt disbursements dragged the foreign exchange reserves of the State Bank of Pakistan (SBP) below the$ 15 billion mark for the first time in nearly a time.
The nonstop decline in foreign exchange reserves is adding to the straits of the government which is formerly facing a record current account deficiency of its term amid a steep devaluation of the rupee against the bone.
The central bank on Thursday reported that its foreign exchange reserves in the week ending on March 18 plunged to$14.962 bn, which is the smallest position since April 2021 when forex effects of the central bank stood at$15.598 bn. The SBP reserves in March 2021 were$13.493 bn.
Fiscal request experts, still, didn’t see the big fall in the foreign exchange reserves as‘ veritably significant’ saying it wasn’t new and it happed in the history too.
“ The falling SBP foreign exchange reserve is an index for low reserves but it doesn’t reflect the situation is going out of control,” said Tahir Abbas, head of exploration at Arif Habib Securities.
The SBP forex effects recorded a fall of$1.424 bn in 18 days of this month while it has lost about$5.11 bn since August 2021. During this period the State Bank entered$ 2bn from the IMF and Sukukproceeds.However, the total loss of SBP’s reserves reached$ 7bn since August, If the$ 2bn inrushes are also counted.
The government is planning to launch another sukuk issue of$ 1bn during the current financial FY22 to support its falling foreign exchange reserves.
The situation looks grave, particularly in the wake of 47pc increase in significances and a$ 12bn current account deficiency during the first 8 months of FY22.
“ The 47pc increase in import bill redounded in a trade deficiency of$ 12bn but the country has formerly paid this quantum. It’s the net reserves the State Bank presently possesses,” said Mr Abbas.
He said the government has also been making debt disbursements as it has paid about$ 6bn during the first two diggings of this financial time while it had paid$13.4 bn in debt servicing during the entire FY21.
He said the country paid$ 2bn to$2.5 bn for the import of vaccines to fight the Covid-19 during the current financial time, which increased the import bill. Amid advanced commodity prices substantially canvas made significances veritably premium lift.
Currency dealers in the interbank and open request weren’t sure whether the falling SBP reserves could bring heavily to the exchange rate.
“ The bone is appreciating due to numerous reasons including advanced canvas prices and advanced demand from importers,” said Zafar Paracha, general clerk Exchange Companies Association of Pakistan. He said the bone may rise further against the rupee in the coming days but not entirely due to falling SBP reserves.
The State Bank has been assuring the request that proper backing is available to meet the current account deficiency and external debt servicing. It also believes to admit about$ 30bn remittances in FY22.
