The foreign exchange reserves held by the central bank rose by 16.5% on a week-on-week basis to $3.8 billion, according to data released by the State Bank of Pakistan (SBP) on Thursday.

On February 24, 2023, the SBP’s foreign currency reserves stood at $3,814.1 million, up by $556 million compared to $3,258.5 million on February 17.

The central bank attributed the rise in foreign exchange reserves to the receipt of $700 million as commercial loan disbursement from China. “After accounting for external debt repayments, the SBP’s reserves increased by $556 million to $3,814.1 million,” it said in a statement.

Overall, the liquid foreign currency reserves held by the country, including the net reserves held by banks other than the SBP, stood at $9,267.9 million. The net reserves held by banks amounted to $5,453.8 million.

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Ismail Iqbal Securities Head of Research Fahad Rauf said last week that further improvement in Pakistan’s foreign currency reserves depended on the timing of revival of the International Monetary Fund (IMF) loan programme and the inflow of fresh financing from other multilateral and bilateral creditors including China, Saudi Arabia and the United Arab Emirates.

“They (FX reserves) are projected to rise to around $7-8 billion by the end of current fiscal year on June 30, 2023,” he said.
The country’s foreign currency reserves have continued to improve after the central bank opted to buy US dollars from the inter-bank market in the wake of a surge in supply of the greenback compared to its demand.

“Availability of surplus US dollars in the inter-bank market has prompted the central bank to intervene (buy the surplus),” a source said.