Forex reserves fall below $11bn

Foreign reserves fell $292 million to $10.83 billion in the week that ended on July 12, due to heavy outgoings for import payments.
According to official data, the State Bank of Pakistan said its reserves fell $371 million to $7.953 billion, while those held by commercial banks rose $79 million to $2.877 billion from $2.798 billion.
Foreign exchange reserves hit an all-time high of $16.486 billion on Oct. 31, 2007, but have fallen d foreign investor’s pulling money out because of political uncertainty dogging the country 3 ” months after a civilian coalition formed a new government.
The State Bank of Pakistan last week took steps to help stabilise the rupee. The main measure was a temporary suspension of forward booking of foreign currency for all imports.
An assurance was also given that the State Bank of Pakistan would provide foreign exchange to authorised dealers for all imports of furnace oil used for power plants.
Analysts said the country’s total reserves were barely enough to cover the import bill for the next 3 months.
The State Bank of Pakistan in May increased its key discount rate to 12.0 percent from 10.5 percent, to counter accelerating inflation and widening fiscal and current account deficits. Analysts expect the State Bank of Pakistan to raise rates again in the coming weeks.
The rupee has depreciated 16.9 percent against the dollar since the beginning of the year and dealers said the outlook remains bleak.

Copyright Reuters, 2008