Karachi, May 18, 2012 (PPI-OT): Pakistan’s liquid foreign exchange reserves have plunged by USD 312 mn (down by 1.89%WoW) to USD 16.103 bn by the week ended on May 11, 2012 from USD 16.413 bn in the previous week.
According to Alfalah Securities Limited, reserves held by the State Bank of Pakistan (SBP) dropped by USD 193 mn (down by 1.62%WoW) to USD 11.784 bn from USD 11.978 bn in the earlier week and reserves held by commercial banks registered a decline of USD 118 mn (down by 2.68%WoW) to USD 4.319 bn against USD 4.438 bn. A sharp fall in the overall foreign exchange reserves is a consequence of higher repayments against foreign loans and massive Dollar outflows over the payment of high import bills.
Alfalah Securities Limited believes the foreign exchange reserves would shed further in the upcoming time due to repayment of USD 400 mn installment to the IMF by May 25, 2012. However, the ongoing negotiations of Pakistan with US over the resumption of Nato supply is likely to improve ties among the two countries, where Alfalah Securities Limited may witness increased aid by US to Pakistan under the Coalition Support Fund (CSF) and hence would provide a cushion to the foreign exchange reserves. Pakistan has sought a fee of USD 2,500 per container from US as a conditional requirement to re-open Nato supply routes to Afghanistan while the US has offered a fee of USD 1,500 per container. The resumption of Nato supplies to Afghanistan may also result in the payment of USD 2.9 bn under CSF that Pakistan is yet to receive.