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KARACHI: The State Bank of Pakistan (SBP) reported on Thursday its foreign exchange reserves amounted to $13.69 billion on Jan 12, down $2.45bn from $16.14bn at the end of June 2017.

The dip comes despite $2.5bn borrowing from global bond markets at the end of November.

Static remittances, increa­sing trade deficit, insufficient rise in exports and relentless build-up of external debt are some of the reasons behind the softening position in the external account.

During the current fiscal year, Pakistan has also raised about $1bn through commercial short-term borrowing.

In view of a rising trade deficit coupled with slow growth in exports, the current account deficit has emerged as the biggest problem for economic managers. In the first five months of the current fiscal year, it rose 91 per cent year-on-year to $6.4bn.

The current account deficit hit a record high of $12.4bn in 2016-17, which hurt the external sector and put enormous pressure on the government to build reserves through more borrowing.

Going by the current trend, analysts believe the deficit can hit another high by the end of this fiscal year.

A recent report showed that foreign direct investment fell 3pc year-on-year in July-December.

Published in Dawn, January 19th, 2018