KARACHI: Foreign exchange reserves of the State Bank of Pakistan (SBP) increased by $3 million during the week ending on Nov 11, a press release said on Thursday.

The small increase in the central bank’s foreign exchange reserves came after an outflow of $955m in the preceding week that ended on Nov 4.

The SBP reported the week-on-week increase of $3m helped the SBP’s reserves hit the $7.95 billion mark. Even though the figure appears insufficient for safely meeting all foreign debt obligations, SBP Governor Jameel Ahmad recently told reporters the foreign exchange reserves were enough to repay all dollar-denominated international loans on time.

The SBP and government officials have been issuing such statements at regular intervals. Such assertions may temporarily provide the currency market with moral support. However, they haven’t been able to generate enough hard currency to stop the gradual slide in the rupee’s value.

Meanwhile, the dollar has kept rising against the rupee for the last five sessions. It reached 222.67 on Thursday after appreciating 26 paise from a day ago.

Bankers and currency dealers aren’t ready to trust the claim made by the government or the SBP. Their scepticism is based on facts that the foreign exchange reserves are going down, the dollar rate is appreciating, exports are in decline and importers are finding it hard to get their letters of credits open — indicators that reflect a growing shortage of dollars.

The SBP said total liquid foreign reserves of the country during the week ending on Nov 11 were $13.79bn. They included the holdings of commercial banks amounting to $5.83bn.

More than eight banks are under investigation for artificially increasing the dollar rate. They allegedly charged a higher rate to importers and minted extra profits.

The currency trading has witnessed the emergence of a strong grey market as inflows in the form of remittances have declined steadily. The declining trend in remittances shows that a higher number of overseas Pakis–tanis are using non-banking channels to send home their hard-earned money.

Published in Dawn, November 18th, 2022