KARACHI: Data available from State Bank of Pakistan for last 13 months till end of January 2018 revealed reserves held by commercial banks have risen by 24 percent to $6.12 billion.
This translates to a rise in commercial bank reserves of $1.19 billion in last 13 months and concurrently the country’s total forex reserves slid by 16.58 percent or $3.84 billion to $19.35 billion as of January 26th, 2018, reported Express Tribune.
According to pundits, people considering rupee’s depreciation against the greenback were converting their savings into dollars. Also, the experts believe people were converting their savings into dollars due to expected issuance of dollar-denominated bonds for overseas and expatriate Pakistani’s.
As per NUST Islamabad School of Sciences and Humanities Principal, Dr Ashfaque Hassan believes there are several reasons for the increase in dollar savings, topmost is the people’s fear of further PKR erosion against the dollar, which indicates a worsening of balance of payments issue.
Secondly, Mr. Khan stated the country’s current account deficit is predicted to swell to $18 billion by end of FY 2017-18, due to which forex reserves would also sharply decline to an estimated $6-6.5 billion till the government completes its five-year tenure.
He added the government may float another $1 billion Eurobond in international market by May 2018 to finance the current account deficit.
Mr. Khan said this would put even more pressure on PKR and contribute to people converting their savings into dollars.
As reported on Thursday, merely months after raising $2.5 billion in end-November via Eurobond and Sukuk issue in international markets, the government is considering floating another $500 million to $1 billion bond, depending on the price.
In end-November 2017, the government had borrowed $2.5 billion via Eurobond and Sukuk (Islamic bond).
President Forex Association of Pakistan, Malik Bostan stated people had been converting their savings into dollars since a while but this became more profound after news came govt was considering dollar-denominated bonds for overseas and ex-patriate Pakistani’s.