KARACHI: The central bank’s foreign exchange reserves increased by $61 million to close at $4.52 billion during the week ended July 7, official data showed on Thursday.

The reserves didn’t include the $4.2bn inflows the State Bank received earlier this week from the International Monetary Fund and two countries. Adding those inflows will take the bank’s reserves to $8.7bn, close to a level they were last seen in October.

“During the current week, SBP received an inflow of $2bn from the Kingdom of Saudi Arabia, $1bn from the United Arab Emirates, and around $1.2 billion from IMF. These inflows will be reflected in SBP’s FX reserves for the week ending on 14-Jul-2023,” the central bank said. The country’s total reserves have now jumped to $9.84bn, as the holdings of commercial banks have also slightly gone up to $5.31bn.

The SBP’s reserves started going downhill at the beginning of 2022, falling from $17.6bn on Jan 7 to $5.6bn on Dec 30 that year. The decline continued in the new year, with the reserves hitting the lowest level during this period at $2.92bn on Feb 3. The last time reserves were below that level was nine years ago, i.e. $2.84bn in February 2014.

Official data excludes $4.2bn inflows received earlier this week

Now that the IMF has approved a new short-term bailout package for Pakistan amounting to $3bn, the inflows have started arriving.

Exchange rate

With the rise of SBP’s foreign exchange reserves, the confidence of the rupee was reflected in both the interbank and open markets.

The dollar lost Rs1.02 in the interbank market, and the SBP reported the closing price of the dollar at Rs276.46 on Thursday. During the session, the dollar fell to as low as Rs275. The open market also noted an improvement and the dollar price fell by Re1, to Rs280. The open market operators said the demand remained down for several reasons, including no demand for the Haj and for summer vacations, etc.

Published in Dawn, July 14th, 2023