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KARACHI: Foreign exchange reserves of State Bank of Pakistan (SBP) dropped by $627 million to $8.049 billion on Thursday.
The foreign exchange reserves held by the central bank continued to spiral downwards for the sixth successive week as they plummeted 6.95% on a weekly basis, according to data released on Thursday.
Overall, liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, stood at $14,893.2 million. Net reserves held by banks amounted to $6,484.7 million.
The continued drop in the reserves raises concerns about Pakistan’s ability to meet its financing requirements as the reserves have fallen even below the $8.5-billion level.
According to the central bank, reserves fell due to external debt servicing and other official payments.
On September 29, the State Bank increased the target policy rate by 100 basis points to 8.5 per cent effective from October 1, 2018. The increase was implemented to further consolidate efforts required to ensure macroeconomic stability, the central bank said in a statement.
Talks with the International Monetary Fund had been going on to discuss terms for a possible bailout. The Fund has suggested to Islamabad to raise interest rates to double digits and let the currency weaken by at least 15% more in the current fiscal year.
The central bank said that though political uncertainty has relatively subsided due to a smooth transition between governments, “concerns on the economic front continue to persist on the back of rising inflation and large twin deficits that are likely to compromise the sustainability of the high real economic growth path”.