Higher SBP reserves keep exchange rate stable

After inflows from the International Monetary Fund (IMF), the foreign exchange reserves of the State Bank of Pakistan (SBP) increased enough to cover 1.6 months of imports, helping the exchange rate to remain stable. The SBP reported on Thursday that the reserves of the central bank went up by $243 million to $8.27 billion during the week ending on Jan 19. The IMF Board meeting held on Jan 11 approved the second tranche of the Stand-By Arrangement (SBA) of $3bn. The SBP received $700m from the IMF in the third week of the current month. However, the size of the SBP reserves could not improve to reflect the full impact of the inflows. Pakistan has been regularly meeting its obligations for foreign debt servicing, with a requirement to pay $24bn during FY24. The country is also actively engaged in negotiations for the rollover of debts. Recently, the United Arab Emirates announced the rollover of $2bn maturing during the current fiscal year. The debt repayment has been extended for another year, now scheduled until January 2025.