SBP reserves drop by $119m.

KARACHI -- The central bank's foreign exchange reserves dropped for the fourth consecutive week to below $4.2 billion, official data showed on Thursday, barely enough to cover a month of controlled imports.

The latest decline in the State Bank's reserves, during the week ended May 19, was $119 million. Commercial bank reserves also fell by $87.5m, to $5.54bn during the week. Therefore, the country's overall foreign exchange holdings were down $206m to reach $9.73bn.

Currency experts said the outflow of each dollar from the country was crucial for the economy and significantly impacted the exchange rate.

The latest decrease in dollar holdings come even as the State Bank has kept tight control over imports by putting strict conditions for banks to open letters of credit.

Financial experts say this tough control has produced two visible results: the importers started buying dollars from illegal markets for imports and the smuggling of goods on large scale.

The markets are full of smuggled...