SBP boosts reserves with local buying

Without any foreign inflow, the State Bank of Pakistan’s (SBP) foreign exchange reserves showed a meagre increase, while commercial banks recorded a significant drop during the week ending May 17. On Thursday, the central bank reported a $22 million increase in its reserves to $9.157 billion during the week. This upward trend in reserves reflects the SBP’s strategic dollar purchases from the interbank market. Before releasing the final tranche of $1.1bn under the Stand-By Arrangement, IMF wanted the SBP to boost its forex reserves to $9bn. The government believes the reserves could reach $11bn by the end of June. Currency experts watching the situation believe that Pakistan still needs to fulfil several preconditions to reach a Saff-Level Agreement in the final talks with the IMF for a new bailout.