In positive economic development, Pakistan Foreign Exchange reserves hits two years high
*KARACHI: **In positive economic development, Pakistan Foreign Exchange reserves hits two years high.*
Pakistan’s foreign currency reserves have been consistently on the rise for the past seven months as they hit an almost two-year high at $12.27 billion in January.
However the commercial banks’ reserves depleted by around $1 billion, or 13.5%, 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 simply linked with around 6% drop in value of the US dollar against the local currency (rupee) since June-end and the rate of return on rupee-based deposits which became hugely attractive than nominal return on foreign currency deposits at banks, experts said.
But in addition to this, the State Bank of Pakistan’s (SBP) decision to allow commercial banks to make advance payments of up to 100% for imports after the central bank returned around $2 billion to commercial banks in loan in the recent past;
barring non-filers of tax returns from opening foreign currency accounts around a year ago; and withdrawal of such deposits by accountholders on rumours that the reserves-strapped government may seize foreign currency deposits to avert default on import payment and debt repayments are apparently some other reasons behind the decline in reserves held by commercial banks, they added.
An official at a well-known bank informed that the central bank has returned around $2 billion to commercial banks in recent months. Earlier, the central bank had borrowed almost entire foreign currency deposits at commercial banks.