Alarming: Foreign exchange reserves plunge to lowest since 2019

Alarming: Foreign exchange reserves plunge to lowest since 2019. Foreign exchange reserves held by the State Bank of Pakistan (SBP) plunged to an alarming level after falling 10.45% to a four-year low.

The foreign currency reserves held by the SBP were recorded at $6,714.9 million as of December 2, down $784 million compared with $7,825.7 on November 25, data released by the central bank showed.

It should be noted that the country’s foreign exchange reserves have fallen below the $7 billion level for the first time since January 2019.

The current reserves stand at around $6.7 billion — almost equal to $6.6 billion on January 18, 2019.

Overall liquid foreign currency reserves held by the country — including net reserves held by banks other than the SBP — stood at $12,581.7 million.

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Net reserves held by banks amounted to $5,866.8 million. The central bank attributed the decline to the payment of $1,000 million against maturing Pakistan International Sukuk and some other external debt repayments.

The SBP mentioned that some of the debt repayments were offset by inflows, mainly $500 million received from Asian Infrastructure Investment Bank (AIIB).

With the current foreign exchange reserves position, Pakistan has an import cover of less than one month.

The $6.7 billion reserves are not enough to service the $8.8 billion principal and interest payments during the January-March period of the current fiscal year.