Pakistan: SBP forex reserves sink to a month's worth of import cover

Islamabad: Pakistan's foreign exchange reserves decreased by USD 345 million to USD 4.2 billion, the central bank said on Thursday, leaving the country with barely a month's worth of import cover, reported Geo News.

In its weekly bulletin, the State Bank of Pakistan (SBP) said that its foreign exchange reserves have decreased as of the week ended March 24, which will provide an import cover of less than a month. The net forex reserves held by commercial banks stand at USD 5.6 billion, USD 1.3 billion more than the SBP, bringing the total liquid foreign exchange reserves of the country to USD 9.8 billion, the statement mentioned, reported by Geo News.

Pakistan struggles to secure external financing to pull the country out of the economic crisis. Pakistan's USD 350 billion economy continues to dwindle amid financial woes and the authorities struggle to strike a staff-level agreement with the International Monetary Fund (IMF).

The Washington-based lender has been in talks with the Pakistani authorities since end-January to resume the USD 1.1 billion loan tranche held since November, part of a USD 6.5 billion Extended Fund Facility (EFF) agreed upon in 2019, reported Geo News.

The IMF funding is critical for Pakistan to unlock other external financing avenues to avert a default on its obligations.

Meanwhile, IMF's Director of Strategic Communications Julie Kozack has said that timely financial assistance from external partners is critical to support the authorities' policy efforts and ensure the successful completion of the review with Pakistan, reported Geo News.

Moreover, gold prices in Pakistan saw an uptick after the investors decided to stay on the sidelines to judge the market direction.

According to the data released by All-Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of gold (24 carats) rose by Rs 100 per tola and Rs 85 per 10 grams to settle at Rs 208,000 and Rs 178,326, reported Geo News.

Investors remained cautious as the IMF wants external financing commitments fulfilled from friendly countries before it releases bailout funds; however, the delay is negatively impacting the currency market, bolstering the demand for gold.