The State Bank of Pakistan (SBP) has continued its steady accumulation of foreign reserves, with total dollar purchases from the interbank market crossing $7.23 billion over the past 11 months. This aggressive intervention strategy reflects the central bank’s commitment to rebuilding external buffers and maintaining exchange rate stability amid evolving macroeconomic conditions.
According to data, the SBP purchased $473 million worth of US dollars from the interbank foreign exchange market in April 2025 alone. This follows significant buying activity in previous months, with the central bank acquiring $860 million in March, $223 million in February, and $154 million in January. These purchases are part of a broader policy approach aimed at fortifying Pakistan’s foreign exchange reserves, which have become a key indicator of financial stability, especially in the context of Pakistan’s ongoing engagement with the International Monetary Fund (IMF) and other multilateral lenders.
The sustained intervention reflects favorable market conditions, such as reduced volatility in the currency market and improved current account dynamics. With the Pakistani rupee experiencing relative calm following prior episodes of instability, the SBP has taken the opportunity to shore up reserves without causing disruptions in the interbank market.
This strategy has been bolstered by the country’s improved macroeconomic fundamentals, including a narrowing current account deficit and easing inflation. According to the Ministry of Finance, consumer price inflation for July 2025 is expected to remain within the 3.5% to 4.5% range, further reducing pressure on the currency and allowing the central bank greater flexibility in managing monetary policy and external accounts.
Pakistan’s foreign exchange reserves have also been supported by continued inflows from bilateral partners and disbursements under the IMF’s Extended Fund Facility. These inflows have not only stabilized the external account but also enabled the SBP to operate more assertively in the currency market without exerting undue pressure on liquidity or the rupee’s value.
The central bank’s strategy of accumulating reserves through market-based purchases, rather than relying solely on debt-creating inflows, is being viewed by analysts as a prudent and sustainable approach. This aligns with global best practices, where central banks actively build buffers during periods of economic stability to guard against external shocks, including commodity price volatility and global financial uncertainty.
The accumulation of over $7.2 billion in just under a year signals a clear intent from the SBP to regain policy space and reinforce market confidence. Analysts believe this will enhance Pakistan’s ability to respond effectively to any future external financing needs, especially as global interest rates and geopolitical uncertainties remain in flux.
While the SBP has not formally disclosed its reserve target, its consistent monthly activity in the interbank market suggests a deliberate and structured reserve management strategy. Market observers expect the central bank to continue this path in the coming months, provided that macroeconomic conditions remain supportive and the rupee maintains its current trajectory.