Pakistan’s forex reserves drop by $110m

KARACHI: Pakistan’s foreign exchange reserves held by the central bank fell by $110 million to $8,153.8 million in the week ending July 27, 2023, the State Bank of Pakistan (SBP) said on Thursday.

The SBP attributed the decline to external debt repayments and other official payments.

The country’s total liquid foreign exchange reserves, which include those held by commercial banks, also decreased by $111.4 million to $13,463.7 million in the same period.

Pakistan’s foreign exchange reserves have been under pressure due to a widening current account deficit and a slowdown in remittances from overseas workers.

According to the SBP, remittances fell 19.3 per cent year-on-year in July to $2 billion, the lowest level since February 2023.

Pakistan’s foreign exchange reserves decrease by $32 million

Remittances also declined 7.3 per cent from the previous month.

Remittances are a key source of foreign exchange for Pakistan, which faces a chronic current account deficit and external debt pressures.

In June, remittances decreased by 21.4 per cent year-on-year to $2.2 billion, compared to $2.8 billion in June 2022. However, remittances rose 4 per cent month-on-month in June.

The SBP said remittances from some countries increased in July, including Saudi Arabia, which sent $486.7 million, up 1.2 per cent from a year earlier.

The United Arab Emirates sent $315.1 million, up 5.8 per cent, while the United Kingdom sent $305.7 million, up 11.8 per cent.

However, remittances from the United States fell 12.6 per cent to $238.1 million, and those from other Gulf countries also dropped sharply.

The SBP said the decline in remittances was partly due to seasonal factors, such as the end of Ramazan and Eid al-Fitr in May and June, when remittances usually surge.