Forex reserves decline to $12.56 billion

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KARACHI: Pakistan’s liquid foreign exchange reserves declined by $239 million to $12.565 billion by the week ended on March 8 against $12.804 billion last week, the State Bank of Pakistan (SBP) said on Thursday.


The reserves held by the central bank came down by $206 million to $7.655 billion as against the previous week’s level of $7.861 billion. The reserves held by commercial banks also eased to $4.91 billion from $4.943 billion.


Analysts said that the latest scheduled repayment to the International Monetary Fund (IMF) depleted the foreign exchange reserves of the country.


On February 26, Pakistan released the 10th installment under the IMF loan, amounting to $391.80 million.

With the latest payment, Pakistan has repaid a total of $3.232 billion to the IMF since July 2012.


Analysts said that further repayments scheduled in the coming months would further squeeze the foreign exchange reserves position. The next installment is due by the end of May.


Foreign exchange reserves hit a record high of $18.313 billion by the week ended on July 30, 2011.


Ahsan Mehanti at Arif Habib Corp said that the decline in the reserves by $239 million is not a big deal as there is no panic-like situation, besides the central bank still has over $7 billion.


Quoting the Asian Development Bank (ADB), Mehanti said that Pakistan would have to approach the IMF to finance its trade deficit as there is no other option.


He did not see any significant pressure on the health of the rupee, saying that the market expects the interim setup to take measures for supporting the local currency.


Khurram Schehzad, vice president at Arif Habib Corp, predicted four to five percent depreciation in the rupee value in the short-term.


“The rupee will eventually depreciate but this will be normal,” he said.


The depletion in the forex reserves by $239 million was not a cause of concern in the short-term, besides the central bank was also comfortable with the situation, he said, adding that the IMF programme is inevitable but Pakistan would have to approach the fund after six months after the formation of the newly-elected government.


He also said that as soon as there is some political stability after the elections, the rupee will stabilise.

Courtesy:  The News

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