The recent update on Pakistan’s foreign exchange reserves indicates a positive trend, with reserves reaching a five-week high above $8 billion, primarily attributed to healthy inflows of foreign currency. This influx of currency has led to a slight appreciation of the Pakistani rupee, which closed at a new five-month high against the US dollar in the inter-bank market.
In addition to the strengthening of the rupee, the open market also witnessed an increase in the value of the currency. Gold prices also surged, reaching a six-and-a-half-month high in line with global trends.
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The State Bank of Pakistan’s foreign exchange reserves increased by $105 million, totaling $8.02 billion in the week ending March 15, 2024. This growth is attributed to bank purchases of US dollars in the inter-bank network, coupled with continuous selling of the greenback by exporters and higher remittances from overseas Pakistanis.
Furthermore, commercial banks also saw an increase in their foreign exchange reserves, contributing to the overall rise in the country’s reserves, which reached $13.39 billion by the same period.
The gradual increase in reserves, along with successful engagements with the International Monetary Fund (IMF) and talks for a new loan program, have bolstered confidence in the Pakistani rupee. Meanwhile, in the international market, gold prices surged following the US Federal Reserve’s decision to keep its benchmark interest rates unchanged but hinted at potential rate cuts later in the year.
