The country’s foreign exchange reserves after following a week-long downward trend recovered, though nominally, by 0.18 per cent to $31 million during the week that ended on the 14th of this month, the central bank said Thursday. This increase, however, stems from increased dollar holdings of the commercial banks and not that of the State Bank. According to State Bank of Pakistan (SBP), during the week under review country’s dollar reserves increased to $17.202 billion against $17.171 billion of last week.
The foreign exchange reserves of the SBP, it said, saw a meager hike of $2 million and ballooned to $13.462 billion against $13.460 billion the regulator held a week earlier. Growth in greenback holdings of the commercial banks, a major stimulus for country’s foreign exchange reserves this week, remained robust and surged by $29 million or 0.7 per cent to $3.740 million, compared to $3.711 billion of the preceding week. During July-September FY12, the current account balance, which had set well in a surplus last year, has widened by over 102 per cent or $612 million to $1.209 billion against a deficit of $597 million of the corresponding period of last year.
The analysts are cautious saying that, if the current trend persisted, the resource-constrained Pakistan would see its current account gap ranging between $4.8 billion and $6 billion by the end of FY12, making it difficult for the economic manager to keep the rupee-dollar parity in check and, at worst, avoiding a default on the balance of payment front. Foreign investment, the analysts believe, is the only permanent factor that, if started reflowing into the terrorism-hit country, could help the government mitigate its balance of payment woes on a sustainable basis.
