KARACHI: The foreign exchange reserves held by the central bank shrank 8.9% on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.

Earlier, the reserves had spiralled downwards, falling below the $7-billion mark, which raised concern over Pakistan’s ability to meet its financing requirements. However, financial assistance from the UAE and Saudi Arabia helped shore up the foreign exchange reserves.

On May 17, the foreign currency reserves held by the SBP were recorded at $8,057.6 million, down $788 million compared with $8,845.6 million in the previous week. The decline in reserves was due to external debt servicing and other official payments, the statement added. Overall, liquid foreign currency reserves, held by the country, including net reserves held by banks other than the SBP, stood at $15,126.5 million. Net reserves held by banks amounted to $7,068.9 million.

SBP reserves surge 8.8% to stand at $8.84b

A few weeks ago, the reserves had jumped on account of $2.5 billion in inflows from China.

Over time, the declining reserves have forced the central bank to let the rupee depreciate massively, sparking concern about the country’s ability to finance a hefty import bill as well as meet debt obligations in coming months. In April last year, the SBP’s reserves increased $593 million due to official inflows. A few months ago, the reserves surged due to official inflows including $622 million from the ADB and $106 million from the World Bank.

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