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SBP’s forex reserves fall to near four-year low

HAIDER

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SBP’s forex reserves fall to near four-year low

Shahid Iqbal Published December 9, 2022 Updated about 3 hours ago




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KARACHI: The foreign exchange reserves held by the State Bank of Pakistan (SBP) plunged $784 million to a nearly four-year low of $6.72 billion during the week that ended on Dec 2, the central bank said on Thursday.
According to the central bank data, the SBP reserves were last recorded below this level during the week ended on Jan 18, 2019, when it had some $6.64bn.
Net foreign reserves held by commercial banks now stand at $5.867bn, meaning the country’s total liquid foreign reserves are now $12.58bn.
Strengthening the foreign exchange reserves remained the top agenda of the new government since it took the helm in April. However, SBP’s reserves have since dropped by more than $4bn from around $10.9bn at the time.
Central bank currently holds $6.72bn, barely enough to cover over one month’s worth of imports
Analyst say the falling reserves may make it more difficult for the country to repay foreign loans; the remaining amount of over $6.7bn is just enough to cover over a month’s imports.
SBP Governor Jameel Ahmad said in a podcast on Thursday that during the last five months, inflows remained just $4bn but the figure was expected to rise in the second half of the current fiscal year ending June 2023.
The central bank attributed the fall in foreign exchange reserves to a payment of $1bn against the maturity of sukuk (Islamic bonds). However, a senior analyst, who wished not to be named, said the $6.7bn reserves were not calculated after the payment for bonds.
Mr Ahmad said in the interview that the SBP paid $1bn and another $1.2bn to two commercial banks, which have agreed to relend the same amount in a few days.
The State Bank said that inflows of $500m from the Asian Infrastructure Investment Bank (AIIB) offset the SBP outflows.
Analysts and researchers have expressed concern about the country’s ability to pay back the huge amount of foreign loans. The frequent concerns have depressed the market and the exchange rate remained unstable during the ongoing fiscal year.
The country is now expecting another tranche from the International Monetary Fund (IMF), but the ninth-review talks have been delayed apparently due to Fund’s criticism over an increased fiscal deficit.
The government is unwilling to impose more taxes for higher revenues, while the IMF insists the government must consolidate the economy.
Independent economists believe the government needed to generate additional revenue of about Rs800bn to get the next IMF tranche.
However, the political cost of squeezing this extra revenue from citizens “is too high for the present government, which is the main hurdle”, the analyst said.
Meanwhile, the demand for dollars remains high in the interbank market, while the open market offers no hard currency. The dollar rose 0.09pc to close at Rs224.37 in the interbank market on Thursday.
However, most market players don’t trust the rates given by the State Bank, saying the deals were actually being done at higher prices.
Published in Dawn, December 9th, 2022
 

HAIDER

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At this rate 2023 is going to be brutal. Severe recession/depression. Tragedy is, even if the crisis goes away after a few months, a broken organization can't be putback if it loses a lot of critical talent. When things get bad, they will seek opportunities elsewhere and the brain drain becomes permanent.
That's what i posted last time. Citi Bank already warns the US which has much more capacity to absorb. For countries like Pakistan.... have no idea. IMF already warn worst First and Second quarters for Italy and Germany

BUSINESSGERMANY

IMF says Germany and Italy to slip into recession in 2023​

10/11/2022October 11, 2022
A forecast by the International Monetary Fund shows Germany and Italy are to tumble into recession next year. Both countries are viewed as the G7 economies that are most exposed to gas supply cuts from Russia.



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epebble

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That's what i posted last time. Citi Bank already warns the US which has much more capacity to absorb. For countries like Pakistan.... have no idea. IMF already warn worst First and Second quarters for Italy and Germany

BUSINESSGERMANY

IMF says Germany and Italy to slip into recession in 2023​

10/11/2022October 11, 2022
A forecast by the International Monetary Fund shows Germany and Italy are to tumble into recession next year. Both countries are viewed as the G7 economies that are most exposed to gas supply cuts from Russia.



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I have a feeling that the 'leaders' (political and military) have not thought through what a collapsing economy will be like. It will be like a never-ending war. Their pissing contests look so absurd and puny compared to the coming human cost.
 

HAIDER

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I have a feeling that the 'leaders' (political and military) have not thought through what a collapsing economy will be like. It will be like a never-ending war. Their pissing contests look so absurd and puny compared to the coming human cost.
If our present Establishment had braincell , they wouldn't touch the govt in such dire economic conditions. Unfortunately, they are not intelligent enough to analyze the economic meltdown all over the world and spiking interest rates in the West, and the energy crisis all over Europe. But our biggest issue is corruption and massive corruption and justice system ..where surety of freedom after any type of corruption or crime.
 

maithil

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However, a senior analyst, who wished not to be named, said the $6.7bn reserves were not calculated after the payment for bonds.


This line in the article.... Could this be the case ?
 

epebble

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However, a senior analyst, who wished not to be named, said the $6.7bn reserves were not calculated after the payment for bonds.


This line in the article.... Could this be the case ?
Difficult to get away with such a large discrepancy which can be publicly verified. SBP doesn't keep dollars in a box.
 

Riz

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If saved it would be great efforts of hafiz ,if default it would be all due to political parties, some PDF advisers have already ordered military boots to sharp their tongues with it 😂
 

Imran Khan

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