The State Bank of Pakistan has used 1.8 billion dollars of its reserves in the past five months to pay for oil imports, reducing dollar demand in the interbank market and supporting the rupee, a bank spokesman said on Friday. The State Bank of Pakistan started to use its foreign exchange reserves to pay for oil imports in November when the rupee was declining sharply versus the dollar because of rising world oil prices. The rupee lost nearly 5.5 percent of its value against the dollar between July 1 and October 30, but has since recovered more than 3.0 percent as dollar demand in the interbank market fell sharply.
The central bank had spent an average of 360 million dollars a month since November to cover oil imports, chief spokesman Syed Wasimuddin said. "So far, the central bank has paid nearly 1.8 billion dollars from its reserves for this purpose," he said.
Pakistan's foreign exchange reserves stood at 12.814 billion dollars as of March 26, of which the central bank held 10.034 billion dollars.
Reserves have been rising steadily on the back of healthy dollar inflows from Pakistanis working abroad, and proceeds from the privatisation of state-run entities.
Reserves hit a record high of 12.969 billion dollars in the week ended March 12, helped by 103 million dollars in receipts from the Aga Khan Economic Development Fund.
In December 2003, the fund bought a 51 percent stake in unlisted Habib Bank Ltd for Rs 22.4 billion (377 million dollars). It paid Rs 11.4 billion at the time of the deal and is paying the outstanding amount this year.
Also, in January, the country received an inflow of 600 million dollars from the sale of a five-year Islamic bond in the international capital market.
Benchmark US light crude prices hit a record high of 57.60 dollars per barrel in March and could surge much higher, investment bank Goldman Sachs said in a research report.
The US bank said oil markets had entered a "super-spike" period that could take prices as high as 105 dollars.