SBP's net FX intervention plunges 76% to USD 154 Mn in May

The State Bank of Pakistan's net foreign exchange intervention fell sharply to USD 154 million in May, the lowest monthly level since February 2025. The decline signals a significant slowdown in the central bank's pace of dollar purchases, according to Insight Securities research based on SBP data.

How much did SBP's FX intervention fall in May?

SBP's net FX intervention dropped 76% in May, falling from USD 635 million in April to USD 154 million. This marked a sharp retreat from monthly purchases exceeding USD 1 billion in September, October and December 2025, when the central bank was actively rebuilding its reserve buffers.

Why did SBP slow its dollar purchases?

The central bank had been buying dollars from the domestic market throughout late 2025 and early 2026 to strengthen reserves. Net intervention reached USD 1.024 billion in December, USD 933 million in February, and USD 667 million in March, according to SBP and Insight Securities data. Analysts at Insight Securities said the May moderation shows reserve accumulation has slowed considerably compared with that earlier buying pace.

The lower intervention could reflect shifting foreign currency market conditions. Analysts said it may also reflect SBP's effort to balance reserve accumulation with liquidity conditions and exchange rate stability.

Did Pakistan still meet its FY2026 reserve target?

Despite the May slowdown, Pakistan met and exceeded its end-June FY2026 reserve objective. SBP's foreign exchange reserves were projected to reach around USD 18.3 billion by June 30, surpassing the USD 18 billion target after inflows and refinancing arrangements were reflected in reserves.

What is SBP's foreign exchange reserve target for December 2026?

SBP has set a target of USD 20.20 billion for its foreign exchange reserves by the end of December 2026. This implies a further buildup of roughly USD 1.9 billion from the estimated end-June level. Reaching this target will depend on continued official inflows, external debt rollovers, refinancing, and workers' remittances.

The target also depends on SBP's ability to purchase foreign currency without creating excessive pressure on the exchange rate. The May intervention figure suggests that while the central bank remains focused on strengthening external buffers, its pace of dollar purchases may continue to fluctuate depending on market conditions and external financing flows.