Pakistan’s foreign exchange reserves hit a five-year high of $23.2 billion last week with the State Bank of Pakistan crediting the rise to the country’s return to the international debt market.
According to the report, forex reserves hit a five-year high of $23.2 billion. “The increase in reserves is attributed to receipt of proceeds of $2.5 billion against issuance of Pakistan euro bonds,” the SBP said in a statement on Thursday.
Read more: $8 billion increase in Pakistan net foreign exchange reserves since June 2019
The forex reserves of the country hit $23.2 billion, the highest level since June 30, 2016. The reserves surged by Rs 2.5 billion or 12.2% on a weekly basis. Whereas, the reserves held by the country stood at $20.6 billion in the previous week.
The central bank’s reserves rose to $16.1 billion, marking the highest level since FY2017.
SBP’s reserves increased by $2.5 billion week-on-week and a week ago the reserves were at $13.5 billion. The reserves held by commercial banks stood at $7.1 billion.
Saad Hashemy, executive director at BMA Capital said that this is an extremely positive development and acknowledgment goes to the government for swiftly concluding the issuance of the Eurobonds.
“Given strong remittances, there is no downside risk to reserves at least in the short to medium term,” said Hashemy.
Meanwhile, Samiullah Tariq, head of Research at Pak-Kuwait Investment Company has said that money from international financial institutions started to flow after the International Monetary Fund’s (IMF) staff agreement.
“This includes flows from Euro bonds, other assistance from multilateral institutions. So, I don’t think reserves have any downside at present,” said Tariq. “Flows are also continuously coming from Roshan digital accounts.”
However, the reserves remained stable since the 2nd quarter of the current fiscal year due to a host of factors: continued official and private inflows, appreciation in the exchange rate and a manageable current account.