Foreign exchange reserves held by the State Bank of Pakistan (SBP) fell another $555 million, clocking in at an alarming level of $7.83 billion as of August 5, 2022, as policymakers in the country continued to scramble over securing dollar inflows and provide breathing room to the economy.

Total liquid foreign reserves held by the country stood at $13.56 billion, said the SBP on Thursday. Net foreign reserves held by commercial banks amounted to $5.73 billion.

"During the week ended on 05-Aug-2022, SBP’s reserves decreased by US$ 555 million to US$ 7,830.3 million due to external debt payments.

"Debt repayments are expected to moderate during the next three weeks of this month. In fact, around three-fourths of debt servicing for the month of August was concentrated during the first week," added the SBP.

Debt repayments are expected to moderate during the next three weeks of this month. In fact, around three-fourths of debt servicing for the month of August was concentrated during the first week: SBP

The reserves’ position is critical for Pakistan which is desperately seeking dollar inflows to meet its balance-of-payments needs. A low level of reserves caused severe pressure on its currency market with the rupee witnessing its worst monthly performance in July in over 50 years.

Since then, the rupee has gained on grounds that Pakistan met all prior conditions of the International Monetary Fund (IMF), a development that would help it secure $1.17 billion of inflow under the Extended Fund Facility (EFF). Additionally, an official source in Abu Dhabi also emphasised the UAE's intention to invest $1 billion in Pakistani companies in various economic and investment sectors.

It also required a combination of an improvement in Pakistan’s trade deficit and realisation of export proceeds to halt a slide that saw the rupee close in on the 240 level in the inter-bank market.

The Pakistani rupee closed near the 219 level on Thursday.

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