SBP Foreign Exchange Reserves Reach Highest Level in 30 Months, Exceeding $11 Billion Mark

In a significant development for Pakistan's economy, the State Bank of Pakistan (SBP) announced on October 11, 2024, that its foreign exchange reserves have increased by $215 million to reach $11.022 billion, the highest level since 2021. This milestone marks a positive turn for the country's foreign exchange market, potentially stabilizing the exchange rate and encouraging exporters to sell their export proceeds.

The upward revision in the foreign exchange reserves is a much-needed boost for the country, as it allows it to cover two months' worth of imports, thanks to the sufficient liquidity in the market. Market speculation suggests that the SBP bought dollars from the banking market to augment its reserves, indicating a strategic move to shore up the country's foreign exchange position.

Pakistan's government had projected to reach $13 billion in SBP reserves by the end of the current fiscal year, and with this recent surge, experts believe that the target is within reach. Moreover, the fact that the country's total liquid foreign reserves have surpassed $16.11 billion also points to a strong financial foundation, with commercial banks holding $5.09 billion. This significant milestone, representing a 29-month high, highlights the resilience of Pakistan's economy despite recent challenges in the international market.

As the PKR strengthens against major currencies, the outlook for the foreign exchange market appears optimistic. With a solid financial foundation and sufficient foreign exchange reserves, Pakistan's exporters are more likely to sell their export proceeds, thus bolstering the economy. The SBP's strategic move to accumulate reserves through the banking market demonstrates its efforts to foster a stable foreign exchange environment, paving the way for sustainable economic growth and a stable Pakistan rupee against global currencies.