Sliding Fx reserves – Alfalah Securities Limited

Karachi, June 22, 2012 (PPI-OT): Pakistan’s liquid foreign exchange reserves have witnessed a steep fall over the past month owing to hefty debt repayments mainly to the IMF under Stand‐By Arrangement (SBA) and due to rising current account deficit.

According to Alfalah Securities Limited, Fx reserves have dropped by 2.4%WoW or USD 371 mn to USD 15.046 bn in the week ending June 14, 2012 from USD 15.417 bn in the previous week. Reserves held by the SBP dipped by 3.93%WoW or USD 437 mn to USD 10.68 bn from USD 11.117 bn, while reserves of commercial banks improved slightly by 1.5%WoW or USD 65 mn to USD 4.365 bn from USD 4.3 bn in the previous week.

It is pertinent to note that Pakistan has to repay another instalment to the IMF of ~USD 110 mn on June 29, 2012 and ~USD 400 mn on August 24, 2012. Forex reserves are likely to decline further in the upcoming time owing to increased debt repayments and soaring current account deficit, therefore exerting additional pressures on the local currency and on the economy as a whole on the external front.

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