Foreign exchange reserves fall below $9 billion

• SBP says decrease comes due to external debt payments.
• Net reserves held by banks stand at $5,839.5 million.
• Pakistan has an import cover of less than 1.5 months.

KARACHI: The country’s foreign exchange reserves held by the State Bank of Pakistan (SBP) continued to decline on a weekly basis.

On July 22, the foreign currency reserves held by the SBP were recorded at $8,575.16 million, down $754 million compared with $9,328.6 on July 15, data released by the State Bank of Pakistan (SBP) on Thursday showed.

According to the central bank, the decrease came due to external debt and other payments.

Overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $14,414.6 million.

Net reserves held by banks amounted to $5,839.5 million.

It should be noted that with the current foreign exchange reserves position, Pakistan has an import cover of less than 1.5 month.

Meanwhile, the Pakistani rupee nosedived by Rs3.92 in a single day to hit an all-time low at Rs239.94 against the dollar in the interbank market today; however, the SBP cannot smoothen the disorderly movement because of limited foreign exchange reserves position, as well as bindings of the International Monetary Fund (IMF) considerations.

However, with Pakistan reaching a staff-level agreement with the Fund foreign exchange reserves are expected to improve after the receipt of $1.17 billion from the global lender.

Emerging markets analyst Emre Akcakmak highlighted that Pakistan's international reserves with the central bank continued to decline in the week ending July 22.

"If [country] doesn't receive Chinese loan, reserves would be $6.3 billion," he warned.

Taking to his Twitter, the analyst said that pace of drawdown isn't slowing. "It's accelerating. Pakistani rupee weakening because this can't go on forever," he added.