The State Bank of Pakistan (SBP) purchased $7.3 billion from the interbank foreign exchange market during the first 11 months of fiscal year 2026, according to central bank data. The amount was slightly higher than the $7.2 billion purchased during the corresponding period of the previous fiscal year. The purchases have contributed to the central bank’s efforts to strengthen its foreign exchange reserves and maintain adequate buffers for meeting Pakistan’s external financing and debt servicing requirements.
Despite the higher cumulative purchases, the SBP recorded a significant decline in its monthly foreign exchange purchases in May. The central bank purchased $154 million from the interbank market during the month, compared with $635 million in April. The May purchase was the lowest monthly amount recorded since January 2025, indicating a notable reduction in the volume of foreign currency acquired by the central bank during the period.
The SBP generally purchases excess foreign currency available in the interbank market to build its reserve position and strengthen its capacity to meet external payment obligations. These market interventions allow the central bank to accumulate foreign exchange buffers when conditions permit. During the first 11 months of FY26, the cumulative purchases reached $7.3 billion, slightly exceeding the amount recorded during the same period a year earlier.
The central bank’s foreign exchange reserves stood at $17.2 billion at the end of May. The reserve position has received support from higher remittance inflows and a relatively narrow current account deficit. Alongside these developments, the SBP has continued to build its foreign exchange buffers through interventions in the foreign exchange market. Stronger external inflows have therefore contributed to maintaining the country’s reserve position while providing additional room to meet external financial obligations.
Remittances from overseas Pakistanis exceeded $41 billion during FY26 and are projected to reach $44 billion in FY27. The continued strength of remittance inflows has provided support to Pakistan’s external account and foreign exchange availability. The SBP expects its foreign exchange reserves to exceed $21 billion during FY26, reflecting its reserve accumulation efforts alongside improvements in external sector inflows.
Pakistan’s current account position has also shown improvement. The current account deficit fell to $328 million in July, representing a 60% decline on a month-on-month basis and a 38% reduction compared with the same period a year earlier. The SBP expects the current account deficit to remain within a range of 0% to 1% of GDP during FY27. Maintaining the deficit within this range is expected to help limit pressure on foreign exchange reserves and support external sector stability.
The Finance Ministry has also assessed external sector conditions as broadly supportive. The ministry pointed to improved exports, particularly from the textile sector, as well as sustained remittance inflows and continued export facilitation measures. These factors are contributing to foreign exchange availability and helping strengthen Pakistan’s external position. Improved export receipts can provide another source of foreign currency alongside remittances, supporting the country’s ability to manage external payment requirements.
The SBP’s $7.3 billion in foreign exchange purchases during the first 11 months of FY26 therefore comes against a broader improvement in Pakistan’s external sector indicators. Although monthly purchases dropped sharply in May, the cumulative amount remained slightly above the previous year’s level. At the same time, reserves reached $17.2 billion by the end of May, while remittances exceeded $41 billion during FY26 and the central bank continued to target further reserve accumulation.
The latest figures highlight the role of foreign exchange market purchases in the SBP’s reserve-building strategy. With the central bank expecting reserves to exceed $21 billion during FY26 and the current account deficit projected to remain within 0% to 1% of GDP in FY27, developments in remittances, exports and foreign exchange market conditions will remain important for Pakistan’s external position. The combination of higher remittances, improved exports and a relatively contained current account deficit has provided support to the country’s foreign exchange reserves during FY26.
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