ISLAMABAD: From June to October 2024, the State Bank of Pakistan (SBP) bought a total of $3.8 billion in the domestic foreign exchange (FX) market, according to data released by the central bank on Tuesday. The SBP typically reports foreign exchange market interventions with a delay of three months.
These market interventions contributed to an increase of $2.1 billion in Pakistan’s foreign exchange reserves, with the remainder allocated towards managing the country’s debt repayments, as noted by Arif Habib Limited in a report.
A breakdown of the data shows that the SBP purchased $573 million in June, $722 million in July, $569 million in August, $946 million in September, and $1.03 billion in October 2024. As a result, the country’s foreign exchange reserves initially increased by $280 million to reach $9.39 billion in June, but dipped by $169 million to $9.22 billion in July. However, reserves climbed again, rising by $216 million to $9.44 billion in August, surging by $1.30 billion to $10.74 billion in September, and gaining $466 million to reach $11.21 billion in October 2024.
As of January 24, 2025, the SBP’s reserves stood at $11.37 billion.
During a press conference last week, SBP Governor Jameel Ahmad highlighted that the central bank’s interventions had been crucial in boosting reserves to $11.5 billion in December 2024, helping stabilize the rupee-dollar exchange rate, which currently hovers around Rs 278-279 per dollar. Without these interventions, the reserves would have remained significantly lower, leading to further depreciation of the rupee.
“If the central bank had not intervened in the foreign exchange market to purchase US dollars, our reserves would not have increased,” Ahmad explained. “This would have caused the rupee to depreciate against the dollar.”
Governor Ahmad also emphasized that the growth in reserves was driven by inflows from workers’ remittances and export earnings, rather than an increase in foreign debt. He pointed out that Pakistan’s foreign public debt had remained under $100 billion from June 2022 to December 2024.
Tahir Abbas, Director of Securities at Arif Habib Limited, noted that the excess foreign currency supply in the inter-bank market had enabled the SBP to absorb surplus dollars, ensuring smooth management of the country’s short-term foreign debt obligations.
Looking ahead, Abbas forecast that foreign currency supply would remain in surplus through the remainder of FY25 (February to June). He also predicted that the upcoming IMF economic review in March 2025, followed by the expected receipt of a $1 billion tranche, would further boost FX reserves. By the end of the current fiscal year on June 30, 2025, Pakistan’s reserves are expected to exceed $13 billion.
