Alarm bells ring as foreign exchange reserves fall below $8bn

• SBP cites interest payments on Eurobonds as reason behind decline.
• Overall liquid foreign currency reserves stand at $13,588.8 million.
• Pakistan has an import cover of less than 1.5 months.

KARACHI: In line with the dominant trend over the last several weeks, the country’s foreign exchange reserves held by the State Bank of Pakistan (SBP) once again declined by 1.32% falling below the psychological level of ?$8 billion,

On September 30, the foreign currency reserves held by the SBP were recorded at $7,899.8 million, down $106 million compared with $8,005.9 on September 23, data released by SBP showed on Thursday.

Overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13,588.8 million.

Net reserves held by banks amounted to $5,689 million. The central bank cited external debt repayment, including interest payments on Eurobonds, as a major reason behind the decline.

With the current foreign exchange reserves position, Pakistan has an import cover of fewer than 1.5 months.

A critical level of reserves has caused severe pressure on the Pakistani rupee with the local unit becoming the worst-performing currency last month.

The rupee gained some ground as Ishaq Dar assumed charge as the new finance minister, a development that helped the currency market recover.

The rupee was at the cusp of a fresh historic low; however, Dar’s arrival gave the market much-needed clarity.

The Pakistani rupee appreciated for the 10th consecutive session on Thursday and closed at 221.75.