THE current account deficit for March came in at $156m, against a surplus of $167m in February, showing a swing of $323m. Current account deficit numbers for the first nine months of this fiscal now stand at $2,173m, as opposed to $1,255m in the same period of last fiscal.

Deteriorating performance in March number was witnessed mainly due to absence of inflows from the Coalition Support Fund (CSF) witnessed in the previous month.

However, the capital account remained robust in March as well, on account of the grant received from Saudi Arabia ($750mn each in February and March). This helped boost reserves to reach the $10bn-mark.

April’s current account deficit may rise slightly, as the shock of the rupee’s appreciation will be fully reflected from Aprils’ export numbers — unless telecom action proceeds are received in April.

Overall, we expect reserves to remain elevated in the fourth quarter of this fiscal due to Eurobond proceeds (reflected in the financial account), receipt of the dollar portion of the upcoming telecom auction proceeds and quarterly CSF tranche, and rising donor agency flows in the upcoming months.

The January-March 2014 quarter (3QFY14) saw the SBP’s reserves increase by $1.9bn, after having dipped by $2.5bn in the first half of this fiscal year. A major chunk of this rise in the third quarter was attributable to the $1.5bn grant received from Saudi Arabia under the Pakistan Development Fund head.

The trade deficit during 3QFY14 saw a pleasant dip of 8pc on a quarterly basis, as exports rose by 2pc while imports dipped by a similar 2pc. The services deficit remained largely flat on a quarterly basis (QoQ) due to receipt of CSF inflows during February.

With the decline in income deficit, the QoQ dip in the overall deficit balance (trade, service and income) was a substantial $652m, but a $541m quarterly decrease in the other current transfers head resulted in the current account deficit for the quarter remaining largely flat QoQ.

Taha Khan Javed, Head of research department, Taurus Securities