Forex reserves fall by over $1.2 billion in two weeks

The country's foreign exchange reserves continued to worsen and further declined by over $400 million during last week. This is the second week in a row, in which the country's foreign exchange reserves witnessed a massive fall. Earlier, in the third week of January, Pakistan's forex reserves declined sharply by $811 million as a major external debt payment of State Administration of Foreign Exchange (SAFE) China was made by the SBP on the directives of the federal government. Cumulatively, the country's foreign exchange reserves fell by over $1.2 billion in two weeks.
Economists said it was already expected that the increase in debt servicing during current fiscal year may stoke some pressure on the country's foreign exchange reserves. "The country's reserves will remain under pressure during this period and even next fiscal year as maturity of Pakistan's Eurobond amounting to $750 million is due in FY17, while repayment of rescheduled Paris Club debt under the Official Development Assistant will start from FY17," they added.
In addition, repayment of Extended Fund Facility (EFF) of the International Monetary Fund will be scheduled from FY18, they maintained. According to State Bank of Pakistan's (SBP) weekly report, the country's total liquid forex reserves stood at $22.031 billion as on February 3, 2017 compared to $22.435 billion on January 27, 2017, depicting a decline of $404 million.
Although, the reserves of the SBP and banks declined during the week under review, a major fall has been witnessed in the SBP's reserves. The SBP's foreign exchange reserves declined by $376 million to $17.219 billion at the end of last week compared to $17.594 billion a week earlier.
Similarly, reserves held by banks stood at $4.814 billion on February 2, 2017 compared to $4.841 billion on January 27, 2017, depicting a decline of $27.6 million. Overall, the country's foreign exchange reserves registered a decline of over $1.2 billion during last two weeks as total reserves stood at $22.031 billion on February 2, 2017 down from $23.246 billion on 20th January this year. During the under-review fortnight, commutatively the SBP's reserves declined by $1.166 billion and that of banks $49.2 million. During last fiscal year, the country's forex reserves increased by $4.4 billion to $23.1 billion supported by the IMF disbursements of EFF and the government's external borrowings.