Pakistan's central bank dollar bought $1.15 billion in November, up 12% compared to October, to bolster its foreign exchange reserves.
The State Bank of Pakistan has bought nearly $5 billion since June, including $1.02 billion in October, according to data posted on its website.
The bank's foreign exchange reserves at the end of May 30 were at $9.105 billion. Consequently, the SBP started buying dollars from June to stabilize its reserves which were bound to fall because of external debt payments.
By Nov-end, reserves were around $12.03 billion, showing a rise of $2.64 billion only because of the central bank's buying spree. Otherwise, reserves would have fallen below $9 billion, which would lead to steep PKR devaluation.
In the first two quarters of the current fiscal year, the SBP paid almost $7.79 billion as principal and interest payments. Of this, $5 billion were principal payments and the remaining were interest payments on external debt.
According to the SBP's statement in January when the monetary policy was announced, the import bill outpaced export earnings and remittance inflows more than offset the widening trade deficit. Based on these trends, particularly the robust workers' remittances, the outlook for the current account balance has improved considerably and is now expected to remain between a surplus and a deficit of 0.5% of GDP in FY25.
Meanwhile, net financial inflows, though tepid during FY25's first half, are expected to improve going forward as a sizable part of official debt repayments has already been made.
Consequently, the improved current account outlook, along with the expected realization of planned financial inflows, is likely to increase the SBP's foreign reserves beyond $13 billion by June 2025.
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