The foreign exchange reserves held by the State Bank of Pakistan decreased by 784 million dollars to 6 billion 72 million dollars, which is the lowest level in almost 4 years.
According to a Dawn newspaper report, State Bank data shows that State Bank reserves were last recorded below this level during the week ending January 18, 2019 when State Bank had $6.64 billion were left.
The net foreign reserves held by the commercial banks have now reduced to 5 billion 87 billion dollars, in this sense the total foreign reserves of the country are now 12 billion 58 billion dollars.Since assuming power in April, the first agenda of the new government has been to increase the foreign exchange reserves, but the State Bank's reserves have decreased by about $4 billion since then, which was $10.9 billion at that time.
State Bank Governor Jameel Ahmed said in a podcast that the income during the last 5 months was only 4 billion dollars but it is expected that this rate will increase in the second half of the current financial year ending June 2023.
The State Bank attributed the decline in foreign exchange reserves to the payment of $1 billion in sukuk bonds, however, a senior analyst said on condition of anonymity that after the payment of the bonds, $6.7 billion Reserves are not calculated.
State Bank Governor Jameel Ahmed said that the State Bank has paid one billion dollars to two commercial banks and then another one billion and 20 million dollars, which have agreed to pay back this amount in a few days.
The State Bank said that the inflow of $500 million from the Asian Infrastructure Investment Bank (AIIB) balanced the State Bank's outflow.
With analysts and researchers expressing concern over the country's ability to service its huge foreign debt, continued concerns also led to pessimism in the market and the exchange rate remained volatile during the current fiscal year.
Pakistan is now hoping for another tranche from the International Monetary Fund (IMF) but negotiations for the ninth review are apparently delayed due to IMF objections over the increase in fiscal deficit.
The government is unwilling to impose more taxes for higher revenues while the IMF insists that the government should stabilize the economy.
Independent economists believe that the government will have to raise additional revenue of around Rs 8 trillion to get the next IMF tranche.
However, the analyst said that the government will have to pay a heavy political price of putting the burden of this additional revenue on the public's pockets, which is the biggest hurdle in this effort.
Meanwhile, demand for dollar is high in the interbank market, the dollar closed at 224 rupees 37 paise yesterday in the interbank market by 0.09%.
However, most of the players in the business field do not trust the rates given by the State Bank, who say that the deals are actually being done at higher prices.
