Middle East crisis propels a jump in forex reserves


KARACHI – Following a waning trend in the past two weeks, the country’s foreign exchange reserves have hit a record high of $17.608 billion in the week ending on March 12. Figures from the State Bank of Pakistan (SBP) reveal that, during the week under review, the country’s total liquid foreign reserves increased by $238 million or 1.37 percent compared to $17.370 billion in the previous week. Current reserves of over $17.608 billion raised 0.1 percent or $19 million compared to the historic $17.589 billion – held by the country in the week ending on February 19. Foreign exchange reserves had stayed down, respectively, at $17.505 billion and $17.370 billion owing to, what the SBP chief spokesman Syed Wasimuddin said, routine repayment of debts and cash withdrawals from commercial banks.
This week, however, the country again broke previous records and held the historic $17.608 billion figure. According to SBP, during the week in review, the central bank held a record $14.186 billion against $13.964 billion of last week, exhibiting an increase of $222 million or 1.5 percent compared to last week.Foreign exchange reserves held by commercial banks exhibited the unusual, rising by $16 million or 0.4 percent in their dollar reserves during the current week. The State Bank data disclosed that banks, other than SBP, held $3.421 billion against the previous $3.405 billion.
The SBP Chief Spokesman Syed Wasimuddin said that the historic increase in foreign exchange reserves was spurred by healthy receipts of exports and worker remittances on back of the ongoing political unrest in the Middle East and Libya. The overseas Pakistanis remitted $ 6.118 billion during the first seven months of the current fiscal year, posting an increase of $920 million compared to last year’s $5.198 billion. The country’s exports receipts, another stimulus for foreign exchange reserves, stood at $13.172 billion in July-January FY11, up by 20.29 percent or $2.22 billion against $10.950 billion in the corresponding period last year. Khurram Shehzad of InvestCap said that robust exports and higher remittances amid Middle East crisis were pushing the cash-stripped Pakistan’s dollar reserves up to the record level.
“People in Bahrain and Libya might have started pulling out their wealth accumulations plus exports remained robust too,” the analyst viewed. With economic observers, still fearing deterioration in the country’s external accounts, Finance Minister Dr Abdul Hafeez Shaikh expects that exports receipts will hit a record $22 billion by end June 30. The finance minister also believes that the soaring worker remittances would go beyond the historic $11 billion in FY11.