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| 12 November 2004 | Friday | 28 Ramazan 1425 |
State Bank's reserves fall by $258m
KARACHI, Nov 11: Liquid foreign exchange reserves held by the State Bank fell by $258 million to $9.519 billion during the week ending on November 6, according to the data released by the central bank. The SBP's reserves fell as the central bank started selling dollars to the banks from the start of this month
for onward selling to their clients to clear their oil import bills.
The reserves fell also because the SBP sold $100 million to Pak-Arab Refinery Co or Parco. Parco needed the dollars to settle a dollar-rupee swap it had earlier entered with some banks borrowing dollars from them against rupees to retire a foreign loan ahead of time.
The data released by the SBP show that overall liquid forex reserves of Pakistan stood at $12.025 billion on November 6 of which $9.519 billion was held by the central bank and the remaining $2.506 billion by other banks. A week earlier, the country's reserves stood at $12.252 billion of which $9.777 billion was held by the SBP and $2.475 billion by the banks.
Thus, the total forex reserves saw a decline of $227 million in the first week of this month.
The SBP started selling dollars to the banks for making oil import payments on behalf of their clients to stabilize the rupee that had lost 5.5 per cent value in July-October chiefly because international oil prices had reached 20-year highs.
The central bank also introduced some checks on foreign exchange outflows to support the rupee. As a result the rupee has recovered more than 2.8 per cent value against the US dollar so far during this month, rising from 61.36 at end-October to 59.63 on November 11.
Pakistan plans to raise foreign currency debt from the international market as well as borrow from friendly countries in the Middle East to keep its foreign exchange reserves from falling sharply because of the dollar selling by the State Bank for oil imports. It is set to issue at least $500 million Islamic bonds sometime during this quarter or early next quarter and is also making preparations to launch eurobonds of similar size or even larger.
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