Foreign exchange: SBP reserves fall $146m to $9.96b

The official foreign exchange reserves of State Bank of Pakistan (SBP) fell by $146 million to $9.961 billion by week ended June 19, 2020, according to weekly data of foreign exchange reserves of the country issued by the SBP on Thursday.

On June 19, the foreign currency reserves held by the SBP were recorded at $9,961.2 million, down $146 million compared with $10,107.1 million in the previous week.

According to the central bank, the decline was attributed to government’s external debt payments of $244.5 million.

“During the week, the SBP received around $1,725 million, including $725 million from the World Bank, $500 million from the Asian Development Bank and $500 million from the Asian Infrastructure Investment Bank,” the SBP said in a statement.

“These funds will be part of SBP’s weekly reserves data as of June 26, 2020, which will be released on July 2, 2020.”

Overall, liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $16,730.1 million. Net reserves held by banks amounted to $6,768.9 million.

Pakistan received the first loan tranche of $991.4 million from the International Monetary Fund (IMF) on July 9 last year, which helped bolster the reserves. In late December, the IMF released the second loan tranche of around $454 million.

Previously, the reserves jumped on account of $2.5 billion in inflows from China.

A few months ago, the SBP successfully made a foreign debt repayment of over $1 billion on the maturity of Sukuk.

In December 2019, the foreign exchange reserves surpassed the $10-billion mark owing to inflows from multilateral lenders including $1.3 billion from the Asian Development Bank.

Foreign investment of over $3 billion in the debt market in the current fiscal year also played an important role in the growing foreign currency reserves.

Earlier, the reserves had spiralled downwards, falling below the $7-billion mark, which raised concern over Pakistan’s ability to meet its financing requirements. However, financial assistance from the United Arab Emirates (UAE), Saudi Arabia and other friendly nations helped shore up the foreign exchange reserves.

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