KARACHI
Pakistan’s FOREX reserves, which were at their peak at $ 24.026 billion in last October 2016, are now under immense pressure and have been buckled, owing to the dropping interbank exchange rates and rising current account deficit.
The reserves of the country stood at $ 20.436 billion after a decline of $ 476 million last week.
The reserves of the SBP shrunk to $ 15 billion this week while commercial bank reserves stood at $ 5.433 billion this week, the SBP said.
The Central Bank is persistently trying to maintain the dollar rates at Rs 105.30 in the interbank market by selling dollars and making payments of the foreign debt services from its reserves.
In July 2017, the greenback rate had touch Rs 108.50 versus a dollar, but it reversed to 105.30 on the second day because of the intervention of finance ministry and central bank.
“The Central Bank has a strong vigilance on country’s exchange rate and we will maintain it despite all adversity in the balance of payments,” said newly appointed SBP’s Governor Tariq Bajwa.
He said we hope that export receipts, remittances and foreign direct investment (FDI) will improve in 2017-18.
He further claimed that the export receipts had gone up by 17.52 per cent in June 2017, which shows a growth momentum in exports. On the other side, the inflows of FDI have also surged in last few months, therefore, we will maintain our exchange rate in between Rs 105.00 to Rs 105.50, he added.
The current account deficit has been managed by FX reserves and a financial account surplus which reached $ 9.6 billion during 2016-17 from $ 6.8 billion in the same period last year. Apart from the increase in official inflows, this accumulation incorporates the impact of an increase in private sector borrowing for CPEC projects, the governor said.
Over the last four years, the FOREX reserves of the country had doubled to $ 23.200 billion which were at $ 10.543 billion in July 2013, but on the other side, the total foreign debt of the country had also touched $ 77.616 billion in March 2017.
The reserves of the country are directly linked with exports receipts, remittances and direct investments and if the inflows in these sectors will improve, the reserves of the country will improve.
Unfortunately, the exports of Pakistan had declined by 17 per cent from $ 25 billion to only $ 20 billion while the remittances had also shrunk by 3 per cent to $ 19 billion over the last four years.
Few Chinese companies have brought over $ 1.24 billion in 2016-17 under China Pakistan Economic Corridor (CPEC) projects of power and constructions and the country is watching towards China. China had promised Pakistan to invest over $ 55 billion in different projects.
If such amount is received in the country as per plan, the country’s reserves could touch over $ 46 billion by 2020; Minister for Planning and Development Ahsan Iqbal had hinted in his statements.
