Pakistan’s foreign exchange reserves fell by $165 million in the week ending October 24, 2025, reflecting ongoing pressures on the country’s external accounts, according to the latest data released by the State Bank of Pakistan (SBP) on Thursday. The country’s total liquid reserves now stand at $19.688 billion, down from $19.853 billion recorded the previous week.
Breaking down the figures, the official reserves held by the SBP saw a modest increase of $17 million, reaching $14.472 billion from $14.455 billion the prior week. This slight gain is attributed to improved external account management and minor inflows from multilateral and bilateral sources. Analysts view this as a positive sign that the central bank’s reserve management efforts are helping to mitigate short-term liquidity pressures.
In contrast, the reserves held by commercial banks dropped sharply by $182 million, falling to $5.216 billion from $5.398 billion. The decline was largely driven by repayments on external debt obligations and lower foreign currency deposits, underscoring the vulnerability of commercial bank holdings to external financing requirements. Economists note that such short-term fluctuations are common in emerging markets, particularly when external payments and debt servicing coincide with temporary dips in foreign currency inflows.
Market observers expect Pakistan’s forex reserves to rebound in the coming weeks, supported by anticipated inflows from the International Monetary Fund (IMF). The country recently reached a staff-level agreement with the IMF under its ongoing Extended Fund Facility (EFF). Once approved by the IMF Executive Board, Pakistan is likely to receive a $1 billion disbursement, which will bolster the SBP’s reserves and provide much-needed stability for the Pakistani rupee.
The recent decline in reserves comes amid broader challenges in the external sector, including rising global oil prices, trade imbalances, and ongoing debt servicing obligations. While SBP’s proactive measures, such as managing liquidity and coordinating with international partners, have provided some cushion, sustaining adequate reserve levels remains a priority to support currency stability and maintain investor confidence.
Economists emphasize that monitoring both SBP and commercial bank reserves is crucial, as the combination determines the country’s overall capacity to meet short-term external obligations. The central bank’s incremental management of its own reserves, alongside expected IMF support, is likely to counterbalance the pressures observed in commercial bank holdings and reinforce market confidence.
Overall, while the $165 million drop highlights vulnerabilities in the near-term external position, the medium-term outlook is cautiously optimistic, contingent on timely IMF disbursements, remittances, and continued external financing flows. Analysts urge continued fiscal and monetary prudence to maintain reserve adequacy and protect the exchange rate from volatility.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.