State Bank of Pakistan's foreign reserves marginally up

The State Bank of Pakistan's (SBP) foreign reserves increased by $35 million, reaching $11.20 billion as of February 14. Net foreign reserves held by commercial banks stood at $4.75 billion, bringing the country's total liquid foreign reserves to $15.95 billion.

Over the fiscal year to date, reserves have grown by approximately $1.87 billion. However, there has been a $65 million decline compared to December 2024.

The import cover, which indicates the number of months Pakistan can sustain imports with its current reserves, slightly decreased from 2.10 months to 2.05 months, based on an average of $5 billion in monthly imports over the last three months.

Reserves peaked above $27 billion in mid-2021 but have since declined due to external obligations. Recent months have shown some stabilization, with both SBP and commercial bank reserves gradually improving.

Analysts emphasize the importance of rebuilding reserves to ensure that gross reserves cover at least three months of imports. This effort is supported by disbursements from multilateral and bilateral loans, along with foreign exchange purchases.

The foreign exchange market has shown significant improvement, with the interbank-open market spread remaining negligible. This has enabled the SBP to make substantial foreign exchange purchases, effectively doubling its reserves.