Pakistan's forex exchange reserves hit 10-year low to USD 3.09 billion

Karachi: Pakistan's central bank said on Friday that its foreign exchange reserves have dropped by 16.1 per cent to USD 3.09 billion at the end of the last fiscal week, the lowest in nearly 10 years.

Financial analysts said that the foreign exchange reserves held by the State Bank of Pakistan would cover just around three weeks of imports.

The central bank said the reserves had come down by USD 592 million because of external debt payments.

It said that presently foreign exchange reserves held by commercial banks stood at USD 5.65 billion, taking total liquid reserves in the country to USD 8.74 billion.

The cash-strapped Pakistan government is presently trying to convince the International Monetary Fund (IMF) to release much-needed money under a stalled bailout programme.

The government is optimistic that once the IMF agrees to release its tranche of USD 7 billion bailout package Pakistan would also be able to get the money released from other platforms and friendly countries that are closely following developments.

A top analyst with investment firm Arif Habib Limited (AHL) calculated that the reserves are at their lowest since February 2014 and now only cover 18 days’ worth of imports.

“The situation will improve a lot once the IMF resumes its programme and this must be done as soon as possible to avoid any economic meltdown,” he said.

The IMF has set several conditions for resuming the bailout, including a market-determined exchange rate for the local currency and an easing of fuel subsidies, both conditions which the government has already implemented.

Last week, the central bank removed a cap on exchange rates and the government raised fuel prices by 16 per cent.

The Pakistan rupee was trading at around 270 rupees in the interbank market and more in the open market.