Review of Pakistan's forex reserves.

Byline: S. Kamal Hayder Kazmi

The foreign exchange reserves is a part of a country's assets or monies having in reserve by the central bank. It is a creditor's right held by every country's government in foreign currency, and also an asset held by a country's monetary authority that can be exchanged for foreign currency at any time. Together with gold reserve, special drawing right and money that a country can utilize at any time in the International Monetary Fund (IMF), it constitutes the country's reserve assets. In a narrow sense, foreign exchange reserve is a significant part of a country's economic strength, which is utilized to balance the balance of payments, stabilize the exchange rate and repay foreign debts.

Liquid Foreign Exchange Reserves* (Million US$)

##Net Reserves Net Reserves Total Liquid

End Period

##With SBP###With Banks FX Reserves

12-Nov-21###16,945.40###6,605.20###23,550.60

19-Nov-21###16,254.10###6,519.70###22,773.80

26-Nov-21###16,010.30###6,488.50###22,498.80

3-Dec-21###18,658.20###6,492.50###25,150.70

10-Dec-21###18,568.30###6,459.50###25,027.80

17-Dec-21###18,153.70###6,479.30###24,633.00

24-Dec-21###17,855.30###6,418.30###24,273.60

*Week-End Levels

Furthermore, in a broad sense, foreign exchange reserves refer to assets denominated in foreign exchange, counting foreign bank deposits, cash, foreign securities, etc. If we talk about developing countries like Pakistan, according to the State Bank of Pakistan (SBP) the foreign exchange reserves held by the central bank declined 0.95 percent on a weekly basis.

Statistics showed that on December 31, the foreign currency reserves held through SBP were registered at $17,686 million, down $169 million as against with $17,855.3 million on December 24. SBP gave no reason behind the decline in reserves.

Overall liquid foreign currency reserves held by the country, counting net reserves held through banks other than the SBP, reached at $24,018.8 million. Net reserves held by banks amounted to $6,332.8 million.

Earlier in the week ended on August 27, 2021 the foreign exchange reserves held by SBP soared to an all-time high of $20.15 billion after Pakistan received general allocation of Special Drawing Rights (SDRs) worth $2,751.8 million from IMF on August 24. On March 30, 2021, statistics also showed that Pakistan borrowed $2.5 billion by Eurobonds through offering lucrative interest rates to lenders...