SBP reserves rise by $11m to $10.1bn

KARACHI: The net foreign exchange reserves held by the State Bank of Pakistan (SBP) increased by $11 million to $10.107 billion during the week ending June 12, 2020, according to data released by the central bank on Thursday.

This nominal increase actually represents the first time reserves have risen since the week ending April 30. Since then, net reserves held by the State Bank have been steadily falling from $12.3 billion in that week, to the current $10.1 billion, mostly on account of external debt repayments. 

The SBP did not state a reason for the increase. 

Net foreign reserves held by commercial banks increased very slightly, from $6.609 billion to $6.66 billion.

The total liquid foreign reserves held by the country fell significantly from $16.71 billion in the week ending June 5, to $16.77 billion during the week under review.

Despite this small increase, overall reserves are expected to decline, due to the combined pressure of a fall in exports and remittances due to the Covid-19 pandemic, and a rise in external debt repayments like those of May 2020. 

According to SBP data, SBP net reserves hovered between the $7 billion and $8 billion region between April and October 2019.

However, starting in November 2019, SBP reserves crossed the $9 billion mark. Reserves were also helped by a $1.3 billion loan from the Asian Development Bank (ADB) in December 2019. Reserves then steadily increased to a peak of $12.8 billion in the first week of March 2020. 

But beginning mid-March, reserves began to decline. SBP reserves fell from $12.8 billion to $10.8 billion between March 13 and April 17. 

However, in the week ending April 24, SBP reserves got some significant help from the International Monetary Fund (IMF), jumping from $10.889 billion to $12.070 billion. 

But the reserves fell over the course of May and June. The week ending May 29 saw the largest-ever weekly drop recorded in a decade, with a plunge of $1.712 billion in SBP reserves. Net reserves fell to $10.362 billion, or levels last seen in the week ending December 6, 2019.