The State Bank of Pakistan’s foreign exchange reserves have hit a record high of $26.864 billion, the central bank said. It is the highest figure the reserves have ever reached.
The reserves stood at $16.568 billion in February. That means they have risen by about $10.3 billion in nine months.
The record figure
The State Bank’s foreign exchange reserves are the foreign currency the central bank holds. The figure rose to $26.864 billion in the latest weekly data, passing every previous high.
The rise is a sharp change from February, when reserves were $16.568 billion. Since then, the central bank has steadily built up its holdings.
Why reserves matter
Foreign exchange reserves are the money a country uses to pay for imports and to service its foreign debt. When reserves are low, a country can struggle to pay for fuel, food and other imports. When reserves are high, the central bank has more room to manage the currency and meet its payments.
Higher reserves also give markets more confidence in a country’s economy. For Pakistan, which has faced repeated pressure on its currency and its import bill in recent years, the record figure is a sign that the external position has strengthened.
What it means for Pakistan
The record reserves give the State Bank more cover for imports and more space to manage the rupee. They do not by themselves fix the wider economy, but they remove one of the pressures that has weighed on Pakistan’s finances.
The central bank has also been active on interest rates. In our earlier report, SBP Raises Interest Rate to 12% as Inflation Stays Above Target, the Bank raised its policy rate to 12% as inflation stayed above target.
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