The State Bank of Pakistan (SBP) reported a decrease of $6 million in foreign exchange reserves, bringing the total to $4.46 billion by the week ending on April 28. This announcement was made by the central bank on Thursday
Experts in currency believe that this slight decline in SBP reserves has contributed to the stability of the exchange rate for more than a couple of weeks.
However, bankers argue that the real support for the exchange rate comes from the current account surplus of $654 million recorded in March.
In an interview, former finance minister Miftah Ismail stated that April would also bring a surplus, which would help bring some stability to the economy.
Pakistan has significantly reduced its imports, which has had a negative impact on economic growth but has improved the balance of payments situation.
Of greater concern for the government is the prolonged delay in signing a staff-level agreement with the International Monetary Fund (IMF) to unlock a $1.1 billion tranche.
Pakistan is in need of another IMF program to ensure future economic stability, as it requires a substantial amount of around $35 billion for external debt servicing in FY24.
However, the central bank has not yet received the promised inflows from Saudi Arabia and the UAE. The country’s overall foreign reserves, including $5.586 billion held by commercial banks, amounted to $10.043 billion during the week.
In the previous week, the SBP reserves had experienced a decrease of $30 million.