The State Bank of Pakistan (SBP) purchased $5.52 billion from the interbank market between June and December 2024.
Foreign exchange reserves still fell by $540 million in the past week, reaching a six-month low of $10.6 billion as of March 21. The decline was attributed to external debt repayments.
Pakistan is projected to receive over $35 billion in remittances this fiscal year, along with inflows from the International Monetary Fund (IMF), World Bank, and a $14 billion rollover of external loans.
In the first eight months of FY25, remittances already exceeded the previous fiscal year’s total by $6 billion. However, economic managers have struggled to effectively utilize these inflows.
SBP’s dollar purchases helped stabilize the exchange rate, encouraging exporters to sell their proceeds. However, the country’s massive debt servicing obligations of over $25 billion per year will absorb most inflows. Additionally, the IMF has not permitted interest rate cuts.
While reserves are expected to receive a boost from a $1.1 billion IMF disbursement and $1.3 billion from the climate resilience fund, concerns persist over Pakistan’s exports, which have struggled to remain consistently high despite efforts by authorities to improve them.
