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SBP Reserves Sink Below $8 Billion For the First Time Since October 2019

The foreign exchange reserves held by the central bank decreased 6.6 percent on a weekly basis, according to data released by the SBP.

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The foreign exchange reserves held by the central bank decreased 6.6 percent on a weekly basis, according to data released by the State Bank of Pakistan (SBP).

On August 5, the foreign currency reserves held by the SBP were recorded at $7.830 billion, down $555 million compared to $8.385 on July 29 due to external debt payments.

The last time SBP reserves went below the $8 billion level was in October 2019.

Overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13.561 billion. Net reserves held by banks stood at $5.730 billion, registering a decrease of $93 million.

In a statement, the central bank said that debt repayments are expected to moderate during the next three weeks of this month.

Adding that, “around three-fourth of debt servicing for the month of August was concentrated during the first week.”

The central bank reserves have been on a downward trend since the start of the year. The reserves held by SBP stood at $17.597 billion on January 7, 2022. The SBP reserves plummeted to $11.319 billion by April 1, 2022. By June 17, 2022, the central bank reserves were down to $8.237 billion.

However, the inflow of proceeds of the Chinese Consortium loan of roughly $2.3 billion provided temporary respite with reserves crossing the $10 billion mark on June 24, 2022. However, the reserves have been on a decreasing trend since and have now gone below $8 billion.

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