The State Bank of Pakistan (SBP) has announced a revised remuneration rate for the Special Cash Reserve Account (US$), raising it from 3.32% to 3.35% for the month of August 2025. This update was shared through an official notice issued by the central bank on Monday and applies to foreign currency deposits governed under FE-Circular 25 of 1998.
The Special Cash Reserve Account is a facility where the SBP offers remuneration on a daily product basis, with the rate being notified at the end of each month. This adjustment, though marginal, reflects the central bank’s strategy to respond to global and local interest rate trends, ensure liquidity management, and improve returns on eligible foreign currency holdings maintained by commercial banks with the SBP.
The change in rate, though slight, signals a calibrated move by the central bank to maintain alignment with international benchmarks and incentivize financial institutions to maintain required reserves more actively. This monthly rate adjustment is one of several mechanisms used by the SBP to manage monetary conditions and support external account stability, especially at a time when Pakistan continues to strengthen its foreign exchange reserves and manage external obligations.
The FE-Circular 25 of 1998, under which these accounts are maintained, mandates that a portion of foreign currency deposits held by banks be placed in a non-interest-bearing Special Cash Reserve Account. However, since 2004, the SBP has been offering remuneration on this reserve on a monthly basis, aligning the rates with prevailing economic conditions.
While the 3.35% rate remains competitive in comparison to global rates on similar instruments, it also signals the SBP’s intention to retain foreign currency within the banking system and minimize outflows. This adjustment comes as Pakistan continues to navigate a complex external financing landscape, with the central bank adopting a cautiously optimistic stance on interest rate strategy and liquidity management.
The SBP has been actively fine-tuning various components of the monetary and foreign exchange framework in recent months. With foreign reserves seeing an uptick and debt servicing remaining a national priority, even minor revisions like these play a pivotal role in shaping institutional behavior and enhancing economic predictability.
Looking ahead, analysts expect the SBP to continue with such incremental adjustments to maintain a balanced approach toward macroeconomic stability, currency management, and capital adequacy across the banking system. Financial institutions, meanwhile, will likely factor in this revised rate into their reserve management strategies and foreign exchange planning for the month of August and beyond.
This move reinforces the SBP’s commitment to transparent and data-driven monetary governance while providing financial institutions with clarity on monthly reserve remuneration expectations under the longstanding FE regulatory framework.