Foreign-exchange reserves held by the State Bank of Pakistan rose by $1.21 billion to approximately $18.33 billion in the week ended September 4.
According to Business Recorder’s account of the central bank’s statement, the increase was driven by proceeds from government commercial borrowing.
The source of the increase matters because loans add to reserves while also creating repayment obligations.
How the reserves are divided
SBP’s reported balance was $18,328.2 million. Commercial banks held another $5,387.6 million in foreign-exchange reserves.
Together, the two components brought Pakistan’s total liquid foreign-exchange reserves to approximately $23.72 billion.
The combined figure should not be confused with the amount held by the central bank alone.
The balances also refer to September 4, the end of the reporting week, rather than the date on which the figures were reported.
Why reserves matter
Foreign-exchange reserves help a country manage external payments, including imports and debt obligations.
A higher reserve balance can provide a larger buffer against unexpected pressures, but the headline amount does not tell the whole story.
Borrowed foreign currency may strengthen the immediate position without producing a lasting increase in export earnings or other recurring inflows.
The cost and maturity of borrowing determine when future repayments will be due.
The reported figures do not specify the lender, interest rate or repayment schedule for the commercial borrowing behind this increase.
What to watch
Subsequent weekly reports will show whether the higher balance is maintained as Pakistan receives and makes external payments.
Reserves are only one part of the country’s external position. Imports, exports, remittances, investment and debt servicing also affect demand for foreign currency.
The immediate development is a larger reserve buffer, with its durability dependent on future inflows and obligations.
Sources: State Bank of Pakistan; Business Recorder.