State Bank’s Forex Reserves Hit a 2.5-Year High

On Thursday, the central bank declared that its foreign exchange reserves had risen to their highest levels in more than two and a half years this month, which could be attributed to a stronger balance of payments, dollar inflows and a new currency regime.

The State Bank of Pakistan recently tweeted, “SBP reserves have increased to $12.93 billion as of November 13, 2020, which is the highest level since February 2, 2018.”

The SBP’s reserves have risen on a weekly basis by $191 million and are sufficient to finance three months of imports. Total liquid foreign reserves held by the country grew from $19.9 billion in the previous week to $20.08 billion.

The assets kept by commercial banks fell from 7.16 billion dollars to 7.15 billion dollars. Any explanation for the increase in reserves was not given by the SBP. This rise, however has been attributed by analysts to improvements in the balance of payments, current account surpluses, multilateral dollar inflows, and a market-based exchange rate regime.

Some analysts have said that Pakistan has to repay loans of about $2 billion and also return possible loans taken to finance reserves. In the period to come, these repayment outflows could bring pressure on the foreign exchange reserves and the rupee.

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