Cash-strapped Pakistan’s foreign currency reserves have fallen to USD 7.83 billion, lowest since 2019 due to the increased debt payments and a lack of external financing this month, according to data released by the country’s central bank on Friday.
The data released by the State Bank of Pakistan (SBP), which is the central bank of the country, said that the country’s foreign reserves have dropped by USD 555 million or 6.6 per cent on a weekly basis due to increased debt payments and a lack of external financing this month.
Pakistan’s Central Bank data has showed that its foreign currency reserves had fallen to their lowest level in almost three years and stood at USD 7.83 billion. It is the lowest since October, 2019, the data report said.
The forex reserves stood at USD 8.385 billion a week earlier on August 5.
The data also showed that Pakistan’s total liquid foreign reserves fell by USD 648 million or 4.6 per cent to USD 13.561 billion and those of commercial banks dropped 1.6 per cent to USD 5.730 billion.
Financial analysts say that the current available forex reserves with the State Bank are enough to cover little over a month’s imports.
The SBP, in a statement, said the reduction in the reverse was due to external debt payments.
Debt repayments are expected to moderate during the next three weeks of this month, the central bank said.
In fact, around three-fourth of debt servicing for the month of August was concentrated during the first week, it added.
Political instability in Pakistan, depleting foreign reserves, delay in the IMF’s loan disbursement, and rupee devaluation have had a hard-hitting impact on the economy of the cash-strapped country which has sought financial assistance on an emergency basis from the global lender.
Analysts believe the current fall in foreign reserves is because the country is in a drought of external funding with the reserves depleting fast amid a stalled $6 billion International Monetary Fund programme.
Once the IMF programme and the expected lower current account deficit amid falling imports help shore up dwindling foreign reserves, one analyst said.
Intikhab Ali of Topline securities said the slowly improving position of the Pakistan currency in the open market with the US dollar have fallen to 215 rupees on Friday indicating the foreign reserves position will improve soon.
The ban on many imports has also helped a lot in preventing the Pakistani rupee from crossing the 250 rupees limit to the dollar, he said.
Last month the Pakistani rupee fell to a record low of around 250 in the open market at one but on Friday the rupee continued to gain for the ninth consecutive session jumping by 3.39 rupees in the interbank market.
According to the SBP, the PKR closed at 215.49 against the dollar, having appreciated 1.57 per cent.