Pakistan’s total liquid forex exchange reserves plunged by $270 million or 1.1% compared from a week ago on the back of external debt servicing, the State Bank of Pakistan (SBP) said on Thursday, which could send negative signals in an economy which is currently seeing deceleration.
According to the data published by SBP, total liquid forex reserves of the country stood at $23,344.44 million. In addition, net reserves held by financial institutions stood at $4,991.2 million during the week ended December 2nd, 2016. Many financial analyst rule out the possibility that the country will experience an increase in reserves in the coming few weeks.
It is pertinent to mention that in November, the Central Bank made a payment of approximately $60 million to SBP. Also, in the previous quarter, SBP reported that reserves had increased by 7.8% on a weekly basis after it received $1,340 million from international sources, including $501 million from International Monetary Fund (IMF), $307 million from Asian Development Bank and $502 million from the World Bank.
Forex exchange reserves are assets in a foreign currency denomination held by the Central Bank of a country. In addition, forex exchange reserves are used to support a nation’s domestic currency. The drop in forex reserves means that the country is either importing more goods than it exports, or is taking on additional loans from global financial bodies (paying interest on it).
BizUpdates will monitor the situation and update its readers accordingly.