FILE PHOTO: An employee counts U.S. dollar bills at a money exchange in central Cairo, Egypt, March 20, 2019. REUTERS/Mohamed Abd El Ghany
The foreign exchange reserves held by the State Bank of Pakistan (SBP) dropped from $17.686 billion to just $5.822 billion in the calendar year 2022 (from Dec 31, 2021, till Dec 23, 2022), registering a decline of 67% or $11.864 billion.
The total liquid foreign reserves held by the country stood at $23.883 billion at the beginning of the year but fell by over 50 percent to $11.7 billion by the end of the year (till Dec 23).
The huge import bill in tandem with skyrocketing energy prices resulted in continuous depletion of foreign exchange of the country. Various measures were taken to arrest the outflow of the foreign exchange but with little impact.
These actions included a ban on various non-essential items for a longer period which also badly hit local industries. To make the situation worst, the hoarding and smuggling of dollars increased in the last quarter of 2022.
During the period, the domestic and geopolitical situation also kept foreign investors away from the country. On the other hand, the receipts through exports and remittances also showed a consistent drop due to the global economic slowdown.
The imbalance of inflows and outflows of the greenback also badly hit the parity of the rupee against the dollar.
