KARACHI: Pakistan reserves held by commercial banks have risen by 24percent to $6.12 billion, latest data has revealed. This translates to arise in commercial bank reserves of $1.19 billion in last 13 months andconcurrently the country’s total forex reserves slid by 16.58 percent or$3.84 billion to $19.35 billion as of January 26th, 2018, reported ExpressTribune.
According to pundits, people considering rupee’s depreciation against thegreenback were converting their savings into dollars. Also, the expertsbelieve people were converting their savings into dollars due to expectedissuance of dollar-denominated bonds for overseas and expatriatePakistani’s.
As per NUST Islamabad School of Sciences and Humanities Principal, DrAshfaque Hassan believes there are several reasons for the increase indollar savings, topmost is the people’s fear of further PKR erosion againstthe dollar, which indicates a worsening of balance of payments issue.
Secondly, Mr. Khan stated the country’s current account deficit ispredicted to swell to $18 billion by end of FY 2017-18, due to which forexreserves would also sharply decline to an estimated $6-6.5 billion till thegovernment completes its five-year tenure.
He added the government may float another $1 billion Eurobond ininternational market by May 2018 to finance the current account deficit.
Mr. Khan said this would put even more pressure on PKR and contribute topeople converting their savings into dollars.
As reported on Thursday, merely months after raising $2.5 billion inend-November via Eurobond and Sukuk issue in international markets, thegovernment is considering floating another $500 million to $1 billion bond,depending on the price.
In end-November 2017, the government had borrowed $2.5 billion via Eurobondand Sukuk (Islamic bond).
President Forex Association of Pakistan, Malik Bostan stated people hadbeen converting their savings into dollars since a while but this becamemore profound after news came govt was considering dollar-denominated bondsfor overseas and ex-patriate Pakistani’s.