Pak’s foreign exchange reserves fall to lowest since 2019 due to rising debt: report

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Cash-strapped Pakistan’s foreign exchange reserves fell to $7.83 billion, the lowest since 2019 due to rising debt payments and a lack of external financing this month , according to data released Friday by the country’s central bank.

Data released by the State Bank of Pakistan (SBP), which is the country’s central bank, indicates that the country’s foreign exchange reserves fell by $555 million or 6.6% on a weekly basis due to rising debt payments and a lack of external financing this month.

Data from the Central Bank of Pakistan showed its foreign currency reserves fell to their lowest level in nearly three years and stood at $7.83 billion. This is the lowest since October 2019, according to the data report.

Foreign exchange reserves stood at $8.385 billion a week earlier on August 5. The data also showed that Pakistan’s total liquid foreign exchange reserves fell by $648 million or 4.6 percent to $13.561 billion and those of commercial banks fell by 1.6 percent to $5.730. billion.

Financial analysts say that the foreign exchange reserves currently available at the State Bank are sufficient to cover just over a month of imports.

The SBP, in a statement, said the reduction in the reverse was due to external debt payments.

Debt repayments are expected to moderate over the next three weeks of this month, the central bank said.

In fact, about three-quarters of debt service for August was concentrated in the first week, he added.

Political instability in Pakistan, depletion of foreign exchange reserves, delay in IMF loan disbursement and devaluation of the rupee have had a huge impact on the economy of the cash-strapped country which has requested assistance financial emergency to the global lender.

Analysts believe the current decline in foreign exchange reserves is due to the country experiencing an external financing drought, with reserves rapidly depleting amid a stalled $6 billion International Monetary Fund program.

Once the IMF program and the expected decline in the current account deficit amid falling imports will help bolster falling foreign exchange reserves, an analyst said.

Intikhab Ali of Topline Securities said the slowly improving position of the Pakistani currency in the open market with the US dollar fell to 215 rupees on Friday, indicating that the position of foreign exchange reserves will improve soon.

The ban on many imports has also helped a lot in preventing the Pakistani rupee from breaking through the 250 rupees to the dollar limit, he said.

Last month, the Pakistani rupee fell to a record low of around 250 in the one-hour open market, but on Friday the rupee continued to gain for the ninth consecutive session, surging 3.39 rupees in the interbank market .

According to the SBP, the PKR closed at 215.49 against the dollar, after appreciating 1.57%.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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