Forex Reserves Plunge by $275 Million

The foreign reserves held by the State Bank of Pakistan (SBP) fell week-over-week by $275 million (1.2 percent). According to the Central Bank’s weekly report released, the country’s total liquid foreign exchange reserves on November 26, 2021, were $22.499 billion. The SBP’s reserves fell by $244 million to $16.01 billion during the week under review. Meanwhile, the net foreign reserves held by the commercial banks fell to $6,489 million, as compared to $6,520 million in the previous week. The SBP’s reserves soared to a record high of $20.15 billion in August after the International Monetary Fund directed Special Drawing Rights worth $2,751.8 million to the former. However, the Bank’s reserves began to decline steadily during the same month, which the Bank attributed to the fulfillment of debt repayments and other related regulations. Meanwhile, the local currency is depreciating sharply and crashed to a record low against the US Dollar at 176.42 on Thursday, December 2. Adding more fuel to the fire, Pakistan’s monthly trade deficit has soared by 162.4 percent, rising to $5.107 billion from $1.946 billion during the period under review. Moreover, the ridiculously high import bill has added a negative-vertical pressure on the Pakistani Rupee and propelled interest rates to swell up simultaneously.