Forex reserves fall to $10.728bn

Foreign reserves fell $102 million to $10.728 billion in the week that ended on July 19 due to outgoings for import payments, the central bank said on Thursday.
According to official data, the State Bank of Pakistan said its reserves fell $175 million to $7.778 billion, while those held by commercial banks rose $73 million to $2.95 billion from $2.877 billion.
Foreign exchange reserves hit an all-time high of $16.486 billion on Oct. 31, 2007, but have fallen since then because of rising oil payments and 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 earlier this month took steps to help stabilise the rupee. The main measure was a temporary suspension of forward booking of foreign currency for all imports.
An assura 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 15 percent against the dollar since the beginning of the year and dealers said the outlook for the medium-term was still uncertain.

Copyright Reuters, 2008