SBP's dollar buying slows by 4.5% but reserves target of $18B stays firm

The State Bank of Pakistan bought approximately $4.874 billion from July 2025 to January 2026, down 4.5% from $5.104 billion in the same period a year earlier, according to SBP data. The slowdown in dollar buying comes even as the central bank keeps its focus on rebuilding foreign exchange reserves ahead of remaining external debt obligations.

How much are Pakistan's foreign exchange reserves right now?

SBP-held reserves stood at around $15 to $16 billion as of early April 2026, after a temporary dip of $1.3 billion to $15.08 billion following Eurobond repayments. The central bank has assessed that reserves will recover to above $18 billion by June 2026, supported by remittance inflows and external financing arranged by the government.

Why is the SBP buying dollars even as purchases slow down?

Analysts say the central bank is purchasing dollars primarily to rebuild reserves after a prolonged external crisis. When remittances and export inflows increase, the SBP steps in to absorb excess dollars, preventing the rupee from strengthening too quickly while steadily building the reserve buffers needed for debt repayments and imports.

A second interpretation frames the buying as managed exchange rate policy. By accumulating dollars during periods of strong inflows, the SBP creates room to support the rupee if outflows rise later. That approach reduces volatility and signals stability to markets, which carries weight for investor confidence and IMF-related commitments.

What does the SBP's monetary policy say about the external account?

In its April 27 monetary policy statement, the SBP said consecutive current account surpluses in February and March produced a small cumulative surplus for July to March of FY26. Workers' remittances were the primary driver. The central bank said the full-year current account is now likely to land near the lower end of its earlier projected range, despite a significant worsening in terms of trade.

On the financing side, the government raised external funding through enhanced bilateral arrangements and Eurobond issuances. The SBP said these steps cushioned the impact of recent debt repayments on reserves. Its monetary policy statement also called for further strengthening of foreign exchange buffers given uncertain global economic conditions.

How much of Pakistan's external debt has been settled for FY26?

SBP Governor Jameel Ahmed said the central bank has already repaid or rolled over around $21.2 billion of the $25.6 billion in total external obligations for the fiscal year. The remaining $4.2 billion is due over the next two months, of which the actual cash payable amount may be approximately $1.5 billion.

Remittances are projected at around $41 billion for FY26, nearly $1 billion below earlier estimates but still above last year's level. The SBP has purchased a total of $13.131 billion since June 2024, when it began publishing monthly intervention data. In FY25 alone, total purchases reached $7.684 billion.