KARACHI: The net foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased by $146 million to $11.97 billion during the week ending July 24, 2020, according to data released by the central bank on Thursday.
This decrease represents the first time reserves have dipped in the month of July. Net reserves had steadily risen since the week of July 2, after hitting below the $10 billion-mark during the week ending July 19.
That represented the first time reserves had fallen below the $10 billion-mark since in November 2019.
Net reserves have steadily risen since, reaching $12.2 billion in early May, before falling again, mostly on account of external debt repayments.
As on those other occasions, the SBP said that decrease in the week ending July 24 was due to government’s external debt repayments.
Net foreign reserves held by commercial banks stood at $6.93 billion. The total liquid foreign reserves held by the country stood at $18.9 billion.
The SBP has received significant inflows in the two months. It received a cumulative total of $1.24 billion from the World Bank, $503 million from Asian Development Bank, $500 million from the Asian Infrastructure Investment Bank and $1.3 billion as GOP loan disbursement from China.
These funds are critical for the SBP, as they act as an important buffer. Analysts have said that the decision to cut the interest rate by 100 basis points to 7pc in the last monetary policy meeting took into account the incoming inflows, among other factors.
The country has also seen a surge in remittances. The fiscal year 2020 saw workers’ remittances increase to an all-time high of $23.1 billion, or a rise of 6.4pc compared to the previous year.
The central bank attributed the significant increase in June remittances to a number of factors, including easing of lockdown by many of these countries in June, owing to which overseas Pakistanis were able to transfer accumulative funds.
“Also, more remittances were sent by overseas Pakistanis to support extended families and friends due to economic problems arising from Covid-19,” the SBP said.