The State Bank of Pakistan (SBP) revealed that its foreign exchange reserves decreased by $125 million within a week, now totalling $7.93 billion as of August 18. This is part of the country’s overall liquid foreign reserves of $13.25 billion. Commercial banks in Pakistan also hold $5.32 billion in net foreign reserves.

This drop in reserves is due to debt repayments. Specifically, during the week ending August 18, 2023, the SBP’s reserves went down by $125 million, reaching $7,930.3 million due to these debt payments.

Previously, the SBP’s foreign exchange reserves had increased by $12 million the week before. However, this increase was followed by a decline in the central bank’s reserves, which had previously decreased for three weeks in a row, primarily due to debt repayments.

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While the SBP’s reserves received a boost in July from the first installment of about $1.2 billion from the International Monetary Fund (IMF) as part of a new $3 billion stand-by arrangement, they are now under pressure due to debt repayments, increased import payments after eased restrictions, and a lack of new inflows.

Regarding Pakistan’s financial situation, the current account, which had been in surplus for four straight months, posted a deficit of $809 million in July, the highest since October 2022.

At the same time, the Pakistani rupee hit a new record low, falling below Rs300 against the US dollar in the inter-bank market on Thursday. The rupee settled at Rs300.22 against the US dollar, showing a decrease of Re0.58 or 0.19 per cent, as reported by the State Bank of Pakistan.