SBP Reserves Decline by Over $500 Million

The foreign exchange reserves continued to deplete with a staggering outflow of 0.56 billion during the week closing on 14 January 2022. According to official data released by the State Bank of Pakistan (SBP), the decrease in the reserve position is due to external debt and various payments. According to the data of the central bank, the foreign exchange reserves of the country declined to $23 billion. Reserves held by the State Bank of Pakistan stood at $17.03 billion. The reserves held by the commercial banks stood at $6.31 billion by the end of January 14. The consistent outflow of reserves has been a worrisome macroeconomic situation that needs to be addressed by attracting inflows with the available options. Foreign exchange reserves continue to take big hits over rising inflationary concerns observed at domestic and global levels. Globally and in advanced economies, inflation has been rising at its highest ever rate since 2008. Given the rapid spread of the Omicron variant, the COVID-19 pandemic will continue to disrupt global economic activity in the near term. The slowdown is expected to coincide with a widening divergence in growth rates between advanced and emerging or developing economies.