The latest financial indicators released by the State Bank of Pakistan reveal that foreign currency deposits in the country have maintained a steady trajectory, reaching 6.917 billion dollars by the end of February 2026. This figure represents a marginal uptick of 0.06 million dollars compared to the preceding month, signaling a period of consolidation in the nation’s external accounts. While the month on month growth appeared nearly flat, a broader analysis of the data shows a more robust performance on an annual basis, with total deposits climbing by 4 percent compared to the same period last year. This yearly expansion suggests a gradual improvement in the appetite for holding foreign exchange within the domestic banking system despite the shifting global economic landscape.
A deeper dive into the composition of these funds shows a slight divergence between the behavior of local and international depositors. Foreign currency holdings belonging to residents were recorded at 5.95 billion dollars for the month under review, marking a minor contraction of 0.54 percent from the 5.98 billion dollars seen in January. This segment of the market is divided into several categories, with demand deposits accounting for 2.18 billion dollars, while savings and time deposits stood at 1.85 billion and 1.92 billion dollars respectively. The slight dip in resident holdings suggests a tactical reallocation of funds or perhaps the utilization of private reserves to meet immediate transactional needs within the local economy.
In contrast, non resident deposits exhibited an upward trend, providing a necessary counterbalance to the domestic decline. These international holdings rose to 970.76 million dollars in February 2026, which is an increase of 32.15 million dollars or approximately 3.43 percent from the 938.61 million dollars reported in the previous month. Within this category, demand deposits remained the most significant component at 651.29 million dollars, followed by 208.55 million dollars in savings and 110.92 million dollars in time deposits. The growth in non resident participation is often viewed as a positive signal for investor sentiment, indicating that the banking sector continues to attract foreign capital even as global interest rate environments remain volatile.
The strategic importance of these foreign currency reserves cannot be overstated, as they serve as a critical mechanism for bridging fiscal gaps and managing the external current account deficit. The State Bank data highlights how these funds are deployed to sustain the flow of trade and industrial activity. During the month of February, a substantial 1.07 billion dollars was utilized specifically for import financing, ensuring that essential goods and raw materials could enter the country. Additionally, the banking system directed 804.14 million dollars toward pre shipment financing and another 146.52 million dollars for post shipment requirements, providing the necessary liquidity for exporters to fulfill their international obligations.
Beyond trade facilitation, a significant portion of these deposits is kept within the regulatory and institutional framework to maintain systemic stability. Approximately 1.33 billion dollars was placed with the State Bank of Pakistan and various local commercial banks. This includes 385.30 million dollars held under CRR1 requirements and 712.71 million dollars under SCRR2 regulations, which are essential for liquidity management and institutional safety nets. The report also noted that 16.64 million dollars were placed with banks within Pakistan while 218.08 million dollars were stationed with international financial institutions. Furthermore, the central bank confirmed that 616.95 million dollars are held as balances abroad, with 259.68 million dollars maintained as cash in hand to meet immediate operational demands.
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