Forex reserves hit historic high

The country's total liquid foreign exchange reserves reached $18.88 billion historic level mainly due to arrival of Coalition Support Fund (CSF). According to State Bank of Pakistan (SBP) weekly forex report issued Thursday, Pakistan's total liquid foreign exchange reserves registered an increase of $286 million during last week ending July 31, 2015. With current increase, the country's total liquid forex reserves reached all-time high level of $18.822 billion at the end of the week compared to $18.536 billion a week earlier.
Previously, in the first week of July, forex reserves touched the $18.714 billion mark. However, since than the reserves were on the decline due to massive foreign debt and other payments. During the last week of July, Pakistan received CSF inflows from the US. These inflows have pushed the country's forex reserves at fresh historic level of $18.82 billion.
During the week under review, the SBP's reserves surged by $381 million to $13.767 billion compared to $13.386 billion in the previous week. The central bank has confirmed that increase in SBP's forex reserves is attributed to official inflows of $418 million including receipts of $337 million under the CSF. With current SBP forex reserves, Pakistan can finance around 3 months' import bill. Meanwhile, reserves held by banks witnessed a declining trend falling by $95 million to $5.055 billion at the end of last week.
Economist said the improvement in the country's external account during last fiscal year was also driven primarily by higher inflows from the coalition support fund as Pakistan received overall $1.45 billion under this head. "Pakistan has estimated some $1.6 billion inflows during this fiscal year and the first instalment has already arrived in time," they said.
The country's total liquid forex reserves are likely to cross $19 billion mark in coming days as several foreign inflows are expected to mature in the first and second quarter of this fiscal year (FY16). "Although, sentiments about the Pak Rupee remained positive due to a comfortable balance of payments position, however a surge in the forex reserves will further support the Pak rupee against the dollar," they added.