In a positive development for Pakistan’s financial outlook, the State Bank of Pakistan (SBP) reported a notable increase in its foreign exchange reserves. According to the data released on April 3, 2025, SBP’s reserves rose by $69.5 million, or 0.66%, during the week ending March 28, 2025. This brings the total reserves held by the central bank to approximately $10.68 billion, up from $10.61 billion in the previous week.
This increase in reserves is significant as it reflects the continued efforts by the SBP to strengthen Pakistan’s foreign exchange position, which plays a crucial role in stabilizing the country’s currency and supporting economic stability. The rise comes at a time when managing foreign exchange reserves is a critical aspect of economic planning, especially for countries facing external debt obligations and balance of payments challenges.
Alongside the growth in SBP reserves, Pakistan’s total foreign reserves also saw a slight increase of $28.7 million, or 0.18%, during the same week, bringing the total to $15.58 billion. This indicates a modest improvement in the country’s liquidity, although the gains were not as significant as those seen in the central bank’s own reserves.
However, the reserves held by commercial banks experienced a decline during the week. These reserves fell by $40.8 million, or 0.83%, bringing the total reserves held by commercial banks down to $4.9 billion. This drop may raise concerns as it reflects a decrease in the ability of private banks to mobilize foreign currency, potentially indicating a tightening of liquidity in the banking sector.
While the reserves held by commercial banks have experienced a decline in recent weeks, the SBP’s foreign reserves have shown substantial growth in the current fiscal year. As of March 28, 2025, SBP reserves have increased by $1.29 billion, or 13.7%, since the beginning of the fiscal year. This upward trajectory provides a strong indicator of the central bank’s ability to manage its foreign exchange reserves effectively despite external economic pressures.
In contrast, the performance of SBP reserves in the current calendar year has been less favorable. So far in 2025, the central bank’s reserves have seen a decrease of $1.03 billion, or 8.83%, from the beginning of the year. This drop could be attributed to a variety of factors, including ongoing external debt repayments, fluctuations in global commodity prices, and adjustments to Pakistan’s current account balance.
Despite the challenges in the calendar year, the growth in SBP’s reserves for the fiscal year provides hope that the central bank is effectively managing its foreign currency holdings. The slight weekly increase in total foreign reserves also suggests that Pakistan’s financial system is maintaining a stable position in the face of broader economic uncertainties.
The increase in SBP-held reserves by $69.5 million this week offers a glimmer of optimism for Pakistan’s economic future. With foreign exchange reserves being a critical component in maintaining the stability of the local currency, these reserves serve as a buffer against external shocks and provide the central bank with the means to manage Pakistan’s foreign obligations.
It is important to note that while SBP reserves have shown growth, the decrease in commercial bank reserves highlights the need for continued vigilance in managing the financial system’s overall liquidity. The coming weeks will likely provide more clarity on whether Pakistan can sustain the positive momentum in its reserves or if further challenges will arise.