*KARACHI: **In positive economic development, Pakistan Foreign Exchangereserves hits two years high.*
Pakistan’s foreign currency reserves have been consistently on the rise forthe past seven months as they hit an almost two-year high at $12.27 billionin January.
However the commercial banks’ reserves depleted by around $1 billion, or13.5%, to a 14-month low at $6.37 billion on January 31, 2020 compared to$7.36 billion on August 17, 2019, according to the State Bank of Pakistan(SBP), Express Tribune has reported.
The drop in the commercial banks’ foreign currency deposits is simplylinked with around 6% drop in value of the US dollar against the localcurrency (rupee) since June-end and the rate of return on rupee-baseddeposits which became hugely attractive than nominal return on foreigncurrency deposits at banks, experts said.
But in addition to this, the State Bank of Pakistan’s (SBP) decision toallow commercial banks to make advance payments of up to 100% for importsafter the central bank returned around $2 billion to commercial banks inloan in the recent past;
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barring non-filers of tax returns from opening foreign currency accountsaround a year ago; and withdrawal of such deposits by accountholders onrumours that the reserves-strapped government may seize foreign currencydeposits to avert default on import payment and debt repayments areapparently some other reasons behind the decline in reserves held bycommercial banks, they added.
An official at a well-known bank informed that the central bank hasreturned around $2 billion to commercial banks in recent months. Earlier,the central bank had borrowed almost entire foreign currency deposits atcommercial banks.
