SBP’s foreign exchange reserves fall to historic low

KARACHI: The foreign exchange reserves held by the State Bank of Pakistan (SBP) continued to decline, plunging by $294 million to reach $5.8 billion as of December 23, ARY News reported on Thursday, quoting the central bank.

According to the data released by the central bank, the total liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, stood at $11,707.2 million.

In the statement, the SBP said that the foreign exchange reserves held by the central bank fell to around $5.82 billion dollars, plunging to historic low.

Meanwhile, net foreign reserves held by commercial banks stood at $5.88 billion. The decrease was “due to external debt repayment,” the statement added.

Earlier on December 22, the foreign exchange reserves held by the State Bank of Pakistan (SBP) declined $584 million to $6.11 billion in a week.

In a statement, the SBP said the total liquid foreign reserves witnessed a reduction of $570 million. The overall reserves were reduced from $12.57 billion to $12 billion.

It is pertinent to mention here that Global ratings agency S&P Global cut Pakistan’s long-term sovereign credit rating by one notch to “CCC+” from “B” to reflect a continued weakening of the country’s external, fiscal and economic metrics.

The S&P Global, in a statement, said Pakistan’s already low foreign exchange reserves will remain under pressure through 2023 unless oil prices slump or foreign assistance improves.

The country also faces elevated political risks which may affect its policy trajectory over the next year.

This year’s severe floods, surging food and energy inflation as well as rising global interest rates are also expected to depress Pakistan’s economic and fiscal outcomes, with refinancing challenges over the medium term, the report said.

The agency maintained its outlook at “stable”.