KARACHI, April 23: Some 90 per cent of the foreign exchange reserves owned by the State Bank of Pakistan are placed with the banks headquartered outside the country — and a very small percentage of the reserves are placed with the overseas branches of the banks headquartered in Pakistan.

Sources close to SBP say out of $9 billion plus liquid foreign exchange reserves owned by the State Bank more than $8 billion are in the shape of foreign currency and deposits placed with the banks headquartered outside Pakistan.

The remaining $1 billion are in different forms including securities worth more than $600 million — issued by the banks headquartered outside the country. The sources say that very small percentage of SBP’s liquid forex reserves (less than $100 million) is in the form of currency and deposits placed with the overseas branches of Pakistani banks.

Some $100 million reserves are in the shape of IMF SDRs or special drawing rights.

At end-March Pakistan’s total liquid foreign exchange reserves stood at $10.3 billion of which $9.1 billion were owned by the State Bank and the remaining $1.2 billion by commercial banks.

Some central bankers privately admit that keeping a very large chunk of reserves in the banks headquartered outside Pakistan carries some risks. But they say that in most cases the reserves placed with the banks outside Pakistan are fully secured and guaranteed by the central banks of the countries where those banks are headquartered.

A senior SBP official who refused to go on record told Dawn that the central bank would soon start making public all information about foreign currency reserves and their placement.

“There is nothing to hide,” he said adding: “we are in the process of compiling all information about foreign exchange reserves on a format that would satisfy such questions as to how much reserves are in Pakistan and how much of them are abroad.”

He admitted that the largest chunk of reserves — whether in the shape of deposits or securities — was denominated in US dollars and placed with the banks headquartered in the United States. But he insisted that the reserves were also denominated in other big currencies without giving the breakup of the reserves denominated in other currencies.