Partly Facetious: What is behind record surge in forex reserves?

06 Aug, 2011

"Foreign exchange reserves have reached an historic high."
"How much?"
"Around 18.3 billion dollars."
"Cool, and this must be backed by higher exports and I tell you our industry doesn't need electricity to raise output and..."
"You must be joking!"
"No, it's a façade - that electricity is needed to increase output and consequently exports. I maintain..."
"You are being facetious, aren't you?"
"Well, then tell me what has caused a rise in our foreign exchange reserves."
"Two loans from international financial institutions accounted for around 400 million dollars."
"400 million out of a total of 18.3 billion is a drop in the ocean."
"There has been a record inflow of remittance income as well."
"God bless a bleeding world economy, with interest rates so low and fears of a financial crisis in the West overseas Pakistanis are sending money home in record amounts."
"But, anyway, some increase in foreign exchange reserves is associated with higher exports."
"Now you are going to say the price of some farm outputs has increased in the international market which accounts for a rise in our exports."
"Yes, I am."
"Oh well!"
"Don't shrug me off...whatever the reasons the foreign exchange reserves have reached an historic high and you have to be happy."
"I would be happy if I thought that the rise in reserves was a reflection of a policy which would imply that the high would be sustained."
"Hey, this country goes from crisis to crisis and, if there is a windfall, just shut up and accept it!"
"As a gift from God?"
"Yes... it is the holy month of Ramazan after all."

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