SBP Foreign Exchange Reserves Increase While Overall Reserves Edge Lower Pakistan’s SBP Foreign Exchange Reserves posted a modest increase during the week ended July 17, offering some support to the country’s external sector despite a slight decline in overall liquid foreign exchange reserves. According to the State Bank of Pakistan (SBP), its foreign exchange holdings rose by $33 million to $17.26 billion, while reserves held by commercial banks declined, resulting in a small drop in Pakistan’s total reserves. The latest figures show that the SBP’s foreign exchange reserves increased to $17.2586 billion. However, Pakistan’s total liquid foreign exchange reserves slipped by $5.9 million to $22.6696 billion, mainly due to lower foreign currency holdings maintained by commercial banks. Analysts said the data indicates that the central bank continues to maintain a stable reserve position, although the decline in commercial bank reserves outweighed the improvement recorded by the SBP. Commercial Banks’ Foreign Exchange Reserves Decline According to data compiled by brokerage firm Arif Habib Limited, commercial banks’ net foreign exchange reserves fell by $38.7 million during the reporting week, bringing their total holdings down to approximately $5.411 billion. The reduction in commercial bank reserves offset the increase in the SBP’s holdings, leading to the slight decline in Pakistan’s total liquid foreign exchange reserves. Based on the latest figures, Pakistan’s reserves are sufficient to cover around 2.54 months of imports, remaining below the level generally considered comfortable for long-term external stability. The SBP’s breakdown shows that, as of July 17, the central bank held nearly $17.3 billion, while commercial banks accounted for roughly $5.4 billion, taking the country’s total foreign exchange reserves to $22.7 billion. Bangladesh’s Foreign Exchange Reserves Cross $36 Billion The latest regional data also highlighted an improvement in Bangladesh’s external position. According to Bangladesh Bank, the country’s gross foreign exchange reserves increased to $36.10 billion after receiving a $320 million disbursement from a bilateral development partner. The increase marks Bangladesh’s highest reserve level since October 2022 and reflects continued efforts by South Asian economies to strengthen their external buffers amid ongoing global economic uncertainty. Pakistani Rupee Remains Stable Against the US Dollar Meanwhile, the Pakistani rupee remained largely stable in the interbank market. The local currency closed at Rs277.90 per US dollar, improving marginally by one paisa from the previous day’s closing level of Rs277.91. Currency markets remained relatively calm despite renewed geopolitical tensions in the Middle East. Globally, the US Dollar Index eased 0.06% to 101.05, as investors continued to monitor geopolitical developments and expectations surrounding US monetary policy. Gold Prices Decline After Recent Rally Gold prices in Pakistan fell sharply after international bullion markets witnessed a correction. According to the All Pakistan Gems and Jewellers Sarafa Association, the price of gold per tola declined by Rs1,800 to Rs432,036, while the price of 10 grams fell by Rs1,543 to Rs370,401. Silver prices also weakened, with the price per tola dropping Rs33 to Rs6,370. The decline followed a sharp increase in domestic gold prices a day earlier, highlighting continued volatility in global precious metals markets. Rising Oil Prices Weigh on Gold Markets Internationally, spot gold declined by around 2% to approximately $4,047.26 per ounce, while US gold futures for August delivery dropped 2.5% to nearly $4,050 per ounce. Market participants attributed the weakness to rising crude oil prices and expectations that persistent inflation could encourage the US Federal Reserve to maintain a tighter monetary policy stance. Meanwhile, Brent crude oil climbed to around $100 per barrel amid escalating tensions in the Middle East and concerns over disruptions to global energy supplies following attacks on Saudi oil tankers in the Red Sea. Higher oil prices have renewed fears of sustained inflation, prompting investors to reassess expectations for future US interest rate decisions. Analysts Say Oil Prices Remain the Key Risk Interactive Commodities Director Adnan Agar said higher crude oil prices were the primary factor behind the recent decline in gold prices. He noted that international gold briefly touched $4,042 per ounce before recovering slightly to around $4,050, after reaching a recent high near $4,150. According to Agar, if geopolitical tensions continue pushing oil prices higher, gold prices may remain under pressure. He also warned that instability in the Middle East, including developments involving Yemen, could further disrupt global energy markets. Economists believe sustained increases in crude oil prices could raise Pakistan’s import bill, fuel domestic inflation, and place additional pressure on the country’s external account. While SBP Foreign Exchange Reserves recorded a modest weekly increase, analysts expect Pakistan’s external sector to remain closely tied to movements in global oil prices, geopolitical developments, capital flows, and future monetary policy decisions by major central banks.
