Pakistan's Foreign Exchange Reserves

[Hyde]

$11.2bn from imf.. imf money isnt given for development but for BOP imbalances (SDRs)..nor are forex reserves for dev..
i think its misinfo..

well when the payment is received usually it goes into the Forex reserves account for a certain period of time before diverting this amount for other purposes and you are right it is for the BOP but a major chunk of that amount will also be used for development purposes as per the IMF.

Anyway lets get back to topic now

 

[xenia]

IMF money is never given for dev purposes..the charter says that
anyway no more arguments..back to topic

 

[jin]

Anywayz encouraging news for overall economic indicators n all aspects of economy are interdependent. Lets dont fight fellas

 

[Neither Right Nor Wrong]

11 bn from world bankye kab ae??+has the money reached SBP as u said this increase in forex is due to this money??
the bold part is contradictory..plz explain..

Yes you are right I meant IMF loan not World Bank- I dont know what I was thinking .

IMF initially approved loan of 7.6 billion dollars in Nov 2008 to meet the brewing balance of payment crisis ie loan default.

An additional 3.2 billion were approved in Aug 09 taking total money lent to 11.3 billion.
Pakistan will be receiving the last installments of this loan in few months time...till then she can not spend this money coz purpose of this loan is:
• To restore the confidence of domestic and external investors by addressing macroeconomic imbalances through a tightening of fiscal and monetary policies; and
• To protect the poor and preserve social stability through a well-targeted and adequately funded social safety net.

These loans were provided under 23 month standby arrangement hence this money can not be spent as of yet.
Once this time period expires pakistan is free to use this money as it wishes.
Hence once pak starts using this money, forex will depreciate and is expected to stabilize around 11-12 billion dollars

 

[Hyde]

Yes you are right I meant IMF loan not World Bank- I dont know what I was thinking .

IMF initially approved loan of 7.6 billion dollars in Nov 2008 to meet the brewing balance of payment crisis ie loan default.

An additional 3.2 billion were approved in Aug 09 taking total money lent to 11.3 billion.
Pakistan will be receiving the last installments of this loan in few months time...till then she can not spend this money coz purpose of this loan is:
• To restore the confidence of domestic and external investors by addressing macroeconomic imbalances through a tightening of fiscal and monetary policies; and
• To protect the poor and preserve social stability through a well-targeted and adequately funded social safety net.

These loans were provided under 23 month standby arrangement hence this money can not be spent as of yet.
Once this time period expires pakistan is free to use this money as it wishes.

Agreed

Hence once pak starts using this money, forex will depreciate and is expected to stabilize around 11-12 billion dollars

well we are awaiting payments from the Friends of Pakistan and the USA that are not part of this IMF + we will be exporting commodities in next few months and most of the money is expected to be received in Forex account obviously so i would say Forex will depreciate from 20~ billion dollars and is expected to stabilize around 14-15 billion dollars

I don't see it going below than that anymore

 

[Neither Right Nor Wrong]

^^^ FODP did pledge 5.28 billion to pakistan in Tokyo in Apr 2009 but as of now only fraction of this money has materialized(i think it is 400 million dollars).

Yes you are right money being given US (ie kerry Luger bill, Coalition Support fund) is not a loan hence need not be returned but their is also a war going on Pak though a low intensity conflict but still is drain on pak's resources, this money received is being directed towards war effort and other development progs in Pak eg thermal power plants being setup US.

As for exports ...trade balance is still in negative ...pakistan is importing more than it exports...though this imbalance has decreased in recent times ,but it is still negative.

So when the influx of money stops forex will take a dip.

 

[ajpirzada]

forget FoDP. it was a big drama. now the world thinks that much money has been given to pakistan where as actually all we got were some tin coins.

secondly u only need FX reserves to keep ur currency stable which is gud in a short run but not very sustainable in long run. in BoP terms, we need FX reserves to fund deficit if we decide not to devalue our currency and bring it to its real value which is again not very sustainable. third and last reason is that State bank funds some of the export receipts and therefore needs FX reserves. if SBP withdraws this facility and tell the importers and exporters to do it themselves, no FX reserves will be required.

in short to run the economy in equilibrium, no FX reserves are required. but practical economics is slightly different due to many hidden factors and economic frictions so its better to have some reserves only to keep u on the safe side.

 

[Neither Right Nor Wrong]

^^^ Well you are right a country can devalue its currency lets the tradesman deal on his own -as it happens in free market economy but it can have negative effect on a country's exports.
Forex are required not only to boost investor confidence and prevent defaulting on a loan(which can be disastrous for domestic and foreign investment).

But aslo acts as a savings account which can be dipped in too "in times of crisis" ie in times of war , when the countries import bill will far exceed its import bill.

 

[ajpirzada]

^^^ Well you are right a country can devalue its currency lets the tradesman deal on his own -as it happens in free market economy but it can have negative effect on a country's exports.
Forex are required not only to boost investor confidence and prevent defaulting on a loan(which can be disastrous for domestic and foreign investment).

But aslo acts as a savings account which can be dipped in too "in times of crisis" ie in times of war , when the countries import bill will far exceed its import bill.

well export are meant to go up after devaluation and no down. the negative effect is only temporary. J curve effect.

and far as investors confidence is concerned that very much depends on ur policy. if u have an open policy and u r not controlling ur exchange rate then investors wont be bothered very much.

as far as war and other uncertainties that is y i said that actual economy works in a slightly different way and there are some frictions there hence gud to have some reserves to keep u on a safer side.

but in the end under an open policy, it will not matter if u have 50bn or 100bn in reserves.

for pakistan, 20 to 25 bn will be very gud but 15 to 20 bn will also do the job.

 

[bc040400065]

good news is that Overseas pakistanis have sent 7.3b$ in 10 months of this FY. and also trade deficit has came down 2b$. But still with both these increases we are only touching 15b$. and that too because of IMF. i think some inteligent thinking is required for the economy from the gov side but it isn't there.. we need to cut our imports specialy luxury items import should be banned. and we need to focus on our exports... remember we have to pay back this IMF loan + the already existing loans as well. so next five years we need to do is to take the trade deficit to zero. and that can only be done with some strick measures in regards with imports specially. and we need to encourage overseas pakistanis to send more money back home through proper banking channels. if this happens (even 50&#37 then i think Insha Allah we will have 25+b$ reserves in 5 years time. but having said this... all this requires good practical governance

 

[Luftwaffe]

It is absolutely not a good news..Its a record one after another Pakistani govt came in power had 15-20 billion dollars of debt added. With bangladesh's forex = 11-13 billion dollars and Pakistan forex at 15 of which most of them injected by Loans..
Aamir Zia...exactly all loans..I confirmed Pakistan is getting 1.13 billion dollars as loan from imf.
So tell me people what is so special of Pakistan's economy?
Railway is bankrupt
PIA bankrupt
Steel Mills soon will close down and bankrupt
Punjab bank fraud
PPP and Mr. 10%/PML-Q/musharraf/pml-N major corruptors..
since 1970-71 460+ Billion Rupees debt written off non of the courts or govt ordered for the retired and serving state bank president to come forward and answer why were all these debt written off..
And on and on..
54-60 Billion dollars debt..

What are people cheering for? Economy is not doing well! unless cases are opened and people are grabbed to start paying that 460 billion rupees debt, hamesh khan is put behind bar for 30 years and all 13 billion rupees are recovered, 10% pays back what he stole from Pakistan, nawaz is put behind bars all public organizations like PIA/Railways and rest are strong enough economy may someday do well so far we're floating on loans that is the reality folks don't mind.

 

[AgNoStiC MuSliM]

Please post news related to Forex reserves in this thread

 

[Hyde]

Pak forex reserves surge by $900 mln​

pdated at: 1901 PST, Thursday, May 27, 2010
Pak forex reserves surge by $900 mln KARACHI: Pakistan's total liquid foreign reserves have witnessed a raise of 900 million dollars to 15.9542 billion following receipt of another tranche of loan from IMF.

Syed Wasimuddin, spokesman State Bank of Pakistan (SBP) told Geo News on Thursday that the foreign reserves held by SBP amounted 12.2496 billion dollars whereas the net foreign reserves held by banks other than SBP figured 3.7046 billion dollars.

===============

So the reserves are reaching 16 billion dollars once again

 

[Hutchroy]

Pak forex reserves surge by $900 mln​

pdated at: 1901 PST, Thursday, May 27, 2010
Pak forex reserves surge by $900 mln KARACHI: Pakistan's total liquid foreign reserves have witnessed a raise of 900 million dollars to 15.9542 billion following receipt of another tranche of loan from IMF.

Syed Wasimuddin, spokesman State Bank of Pakistan (SBP) told Geo News on Thursday that the foreign reserves held by SBP amounted 12.2496 billion dollars whereas the net foreign reserves held by banks other than SBP figured 3.7046 billion dollars.

===============

So the reserves are reaching 16 billion dollars once again

The foreign reserves held by SBP amounted US$ 12.2496 billion

The net foreign reserves held by banks other than SBP figured US$ 3.7046 billion.

In my opinion the US$ 3.7046 held by the Commercial Banks are on behalf of Private Individual Foreign Exchange Accounts.

The last time Nawaz Sharrif converted these "Private Individual Foreign Exchange Accounts" to Rupee Accounts a large number of Pakistanis suffered Humungous Losses.

As such is it right to consider the "Private Individual Foreign Exchange Accounts" as part of Pakistan's Foreign Exchange Reserves as these Reserves do not belong to the country but to Private Individuals?

I ask this question as these "Private Individual Foreign Exchange Accounts" do not require Pakistan Government's Permission to be transfered out of Pakistan.

 

[Hyde]

The foreign reserves held by SBP amounted US$ 12.2496 billion

The net foreign reserves held by banks other than SBP figured US$ 3.7046 billion.

In my opinion the US$ 3.7046 held by the Commercial Banks are on behalf of Private Individual Foreign Exchange Accounts.

The last time Nawaz Sharrif converted these "Private Individual Foreign Exchange Accounts" to Rupee Accounts a large number of Pakistanis suffered Humungous Losses.

As such is it right to consider the "Private Individual Foreign Exchange Accounts" as part of Pakistan's Foreign Exchange Reserves as these Reserves do not belong to the country but to Private Individuals?

I ask this question as these "Private Individual Foreign Exchange Accounts" do not require Pakistan Government's Permission to be transfered out of Pakistan.

don't worry these Private Individual reserves are also increasing day by day. If some peoples withdraw money abroad then many others bringing money to the country at the same time. Its not like everybody will withdraw in a matter of day

Relax