Pakistan’s gold and foreign exchange reserves have fallen to critical level
2023.02.02 13:10
Pakistan’s gold and foreign exchange reserves have fallen to critical level
By Kristina Sobol
Budrigannews.com – The State Bank of Pakistan (SBP) reported on Thursday that Pakistan’s foreign exchange reserves decreased by 16.1% to $3.09 billion in the week ending January 27. According to analysts, this amount covers less than three weeks’ worth of imports.
As part of a stalled bailout program, the nation is locked in negotiations with the International Monetary Fund (IMF) to release much-needed funds. The release of funds from other platforms that are awaiting approval from the lender would also benefit from a successful outcome with the IMF.
The repayment of external debt, the central bank stated in a statement, was the cause of the decrease in reserves.
SBP added that commercial banks held $5.65 billion in reserves, bringing the nation’s total liquid reserves to $8.74 billion.
According to calculations made by the local investment firm Arif Habib Limited (AHL), the reserves are at their lowest level since February 2014 and currently only cover 18 days’ worth of imports.
Tahir Abbas, head of research at AHL, stated, “The country is in dire need of fresh inflows and the resumption of the IMF programme as soon as possible to avoid the crisis.”
Pakistan, which is short of cash, met with the IMF on Tuesday to try to get money from a $7 billion bailout to prevent economic collapse. The IMF’s ninth review of its Extended Fund Facility, aimed at assisting countries in balance-of-payments crises, is the goal of the talks, which will last until February 9.
A market-determined exchange rate for the local currency and a reduction in fuel subsidies were among the lender’s conditions for restarting the bailout. A cap on exchange rates was recently lifted by the central bank, and the government increased fuel prices by 16%.
According to data from state banks, during Thursday trading, the rupee experienced a loss of 0.93 percent in the interbank market and reached a new record low of 271.36 rupees against the US dollar. In the open market, the rupee also lost 0.18 percent.
The rupee has fallen overall by 24.51 percent over the fiscal year that began in July.
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