The decline in foreign exchange reserves continued as they fell to $21.1b according to a report released by the State Bank of Pakistan on Thursday. This represents a decline of about $3b in the last six months and translates into a fall of half a billion dollars every month.
The central bank’s own reserves fell to $16.05b registering a decline of $366m due to payments and external debt servicing in the week ended that ended on April 21. This is happening largely as a result of the rising current account deficit which has ballooned to $6.1b in the first nine months of the current financial year. It has also come to knowledge that public sector organisations have not been procuring dollars from the interbank market.
As per currency dealers and experts despite Pakistan’s declining capacity to service foreign debt, the exchange rate is not expected to undergo a major shift although the position could be subject to change in the next six months. As per market experts, swap premiums have largely been unchanged since the last few weeks although importers have shown interest in booking forwards. Despite low premiums for one to two-month tenors, exporters have still been selling dollars forward. The foreign exchange reserves figure for commercial banks didn’t reflect any change since October and were recorded at $5.1b.
