SBP-held forex reserves surge to $7.76 billion in December

In the week concluding on December 22, 2023, Pakistan witnessed a substantial increase in its total liquid foreign reserves, reaching a noteworthy $12,855.7 million.

This surge was reported by the State Bank of Pakistan (SBP), which highlighted that the central bank’s reserves saw a remarkable uptick to $7,757.1 million during the same period.

The SBP revealed that the surge in reserves, amounting to $852 million, was primarily attributed to official inflows from the Government of Pakistan received during the week under review.

Simultaneously, commercial banks in the country reported net foreign reserves amounting to $5,098.6 million, further contributing to the overall resilience of Pakistan’s financial position.

This positive development follows the previous week’s figures, ending on December 15, 2023, where the total liquid foreign reserves were recorded at $12,068.4 million.

During this period, the central bank held reserves worth $6,904.8 million, with commercial banks reporting net foreign reserves of $5,163.6 million.

In contrast to the positive financial indicators, Pakistan’s auto industry faced significant challenges in 2023, marked by a sharp decline in car sales of up to 55 per cent. Factories involved in manufacturing car parts also experienced a substantial production cut of 70 per cent.

The persistent challenges in the auto sector were attributed to the exchange rate crisis, causing a decline in income until the previous year.

The repercussions of reduced car sales were not limited to impacting the national Treasury; they also resulted in a noticeable decrease in revenue from products.

An essential factor in this context is the adjustment made by automobile companies following a decrease in the value of the US dollar against the Pakistani rupee.

In the closing months of 2023, these companies responded by slashing the prices of their units, reflecting the dynamic interplay between economic forces and market conditions.