The foreign exchange reserves of the country witnessed a historic decline of $688 million to $8.1 billion due to rising current account deficit, foreign payments and slow foreign inflows. State Bank of Pakistan (SBP) on Saturday said that country's foreign exchanges reserves had declined to $8.1355 billion during the week ended September 27, as against the $8.8235 billion a week earlier.
The major decline was witnessed in the reserves held by SBP, which come down below the $five billion mark, while reserves held by banks maintained the upward trend. The reserves held by SBP declined by $721.2 million to $4.6859 billion during the last week, which stood at $5.4071 billion previous week ended September 20, 2008.
Reserves held by banks have surged by $33.2 million during last week, which swelled to $3.4496 billion as compared to some $3.4164 billion a week earlier. "Major reason for the decline is the decreasing portfolio inflows, as foreign investors are reluctant to invest in the equity market due to political uncertainty and negative reports regarding country's stock markets," economic experts opined.
They said that foreign investors were expecting political stability after the general election in Pakistan, however, despite formation of a political government, the country was still witnessing political and economic uncertainty.
Sources said the recently released $500 million by Asian Development Bank under the Accelerated Economic Transformation Programme, would help increase the foreign reserves. However, they said, its impact on forex reserves would reflect in next week. They said that ADB would provide $1.5 billion in three tranches under the said programme and the first tranche of $500 million had been received by State Bank of Pakistan.