The State Bank of Pakistan (SBP) saw a slight rise in its foreign exchange reserves, gaining $27.1 million or 0.24 per cent week-on-week (WoW), bringing the total to $11.25 billion for the week ending February 28, 2025, according to data released by the SBP on Thursday.
However, despite the modest growth in SBP’s reserves, the country’s total reserves experienced a decline, dropping by $51.9 million or 0.33 per cent WoW to settle at $15.87 billion.
This fall was primarily driven by a reduction in reserves held by commercial banks, which decreased by $79 million or 1.68 per cent WoW, amounting to $4.62 billion.
Over the course of the current fiscal year, SBP’s reserves have witnessed a notable increase of $1.86 billion or 19.81 per cent. However, in contrast, reserves for the ongoing calendar year have dropped by $461 million, marking a 3.94 per cent decrease.
The Monetary Policy Committee (MPC) of the SBP is scheduled to meet on Monday, March 10, 2025, to deliberate on the monetary policy. Following the meeting, the SBP will release a formal monetary policy statement through a press release later that day.
The SBP faces a challenging decision on the interest rate. On one side, the business community is urging a significant cut of 500 basis points in a single move, while on the other, multinational corporations are advocating a more cautious stance.
Ehsan Malik, CEO of the Pakistan Business Council (PBC), commented on the matter, suggesting that the MPC might opt for a cautious approach and keep the policy rate unchanged for now.
“While inflation is on the decline, the MPC will be considering the forward inflation outlook, which currently supports a 4 per cent positive policy rate—something they may want to maintain,” Malik added.
Malik also noted that the accumulation of foreign exchange reserves has slowed, as external financing remains contingent on an improved credit rating and the successful conclusion of the ongoing International Monetary Fund review.
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