SBP Forex reserves break falling spree, cross $3bn

-State Bank’s forex reserves stand at $3.2 billion
-Total liquid foreign reserves amount to $8.7 billion
-Central Bank did not mention any specific reason for current jump

From Zeeshan Mirza

KARACHI: The State Bank of Pakistan (SBP)-held foreign exchange reserves snapped a three-week declining spree af-ter losing $1,685 million cumulatively during this period.
The reserves rose above $3 billion once again after an increase of over 9%; however, the amount is still barely enough to cover one month of imports.
In a statement, the central bank said the foreign currency reserves held by the SBP were recorded at $3,192.9 million as of February 10, up $276 million compared with $2,916.7 on February 3.
The net forex reserves held by commercial banks stand at $5,509.3 million, $2,316.4 billion more than the SBP, bringing the total liquid foreign reserves of the country to $8,702.2 million, the statement mentioned.
The central bank did not mention any specific reason behind an increase in SBP-held reserves.
Pakistan is eyeing the crucial loan tranche from the International Monetary Fund (IMF) which would unlock other ave-nues of funding for Pakistan.
Faced with critically low US-dollar reserves, the government had banned all but essential food and medicine imports until a lifeline bailout is agreed upon with the IMF.
Pakistan’s economy is in dire straits, stricken by a balance-of-payments crisis as it attempts to service high levels of ex-ternal debt amid political chaos and deteriorating security.
Inflation has rocketed, the rupee has plummeted and the country can no longer afford imports, causing a severe de-cline in the industry.
Since January, the world’s fifth most populous nation is no longer issuing letters of credit, except for essential food and medicine, causing a backlog of raw material imports the country can no longer afford.

The logjam coupled with the rupee devaluation has sparked a major decline in manufacturing, including textiles and steel, and building projects.

While the IMF cash injection will not be enough to rescue Pakistan on its own, the government hopes it will boost con-fidence and open the doors for friendly nations such as Saudi Arabia, China and the UAE to offer further loans.