The State Bank of Pakistan’s (SBP) foreign exchange reserves saw a small decline of $15.3 million, or 0.13%, during the week ending January 3, 2025. The total reserves held by SBP stood at approximately $11.7 billion. This week-on-week (WoW) decrease was revealed in a report issued by the central bank on Thursday.
Although the reserves experienced a slight contraction, it is important to note that SBP-held reserves have shown considerable growth over the course of the current fiscal year. So far, reserves have increased by $2.31 billion, or 24.56%, demonstrating the central bank’s efforts to bolster foreign exchange reserves despite global economic pressures.
Commercial Bank Reserves Also Drop
Commercial banks also reported a decrease in their foreign exchange reserves. These reserves fell by $15.6 million, or 0.33%, reaching a total of $4.68 billion. As a result, Pakistan’s overall foreign reserves, which include both SBP and commercial bank holdings, dropped by $30.9 million, or 0.19%, to $16.38 billion.
The decline in reserves across both SBP and commercial banks highlights the challenges facing Pakistan’s foreign exchange situation. Despite this weekly decrease, the country’s reserves have shown resilience over a longer period, with fluctuations being part of the broader economic context.
Reserves Key to Economic Stability
Foreign exchange reserves are a vital indicator of Pakistan’s economic stability. They play a critical role in supporting the local currency and meeting international financial obligations. Despite the recent dip, experts emphasize that maintaining sufficient reserves is essential to navigating the challenges of external financing and currency market volatility.
Fluctuations in foreign reserves are common, particularly when global economic conditions are shifting. While the country has made strides in increasing its reserves in the past year, experts caution that consistent and strategic management of external accounts is necessary to safeguard Pakistan’s financial stability.
Detailed Weekly Breakdown
- SBP-held reserves: $11.70 billion, down by $15.3 million (-0.13%).
- Commercial banks’ reserves: $4.68 billion, down by $15.6 million (-0.33%).
- Total liquid reserves: $16.38 billion, down by $30.9 million (-0.19%).
The central bank’s foreign exchange reserves have proven to be a strong cushion against economic shocks, but these recent fluctuations serve as a reminder of the importance of maintaining stable reserves in the face of global economic challenges. The SBP and commercial banks must continue working to ensure sufficient reserves to navigate the uncertainties of the global financial landscape.
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