Pakistan’s foreign exchange reserves have climbed to a record $26.864 billion, increasing by $110 million during the latest reporting week, according to data released by the State Bank of Pakistan (SBP).
The development comes as the ongoing war, which began on February 28, has disrupted economies across the region, including Pakistan. Despite the economic challenges, the central bank has strengthened its foreign exchange holdings, adding more than $5 billion to its reserves since February.
SBP data showed that the central bank’s reserves increased from $16.568 billion in February to $21.568 billion as of October 30. During the latest week, the SBP recorded an increase of $39 million in its foreign exchange reserves.
The financial sector considers the current level of central bank reserves sufficient to help maintain exchange rate stability and encourage exporters to repatriate their earnings promptly. A stable exchange rate is also seen as a source of confidence for importers.
However, currency experts argue that the rupee remains overvalued, making imports cheaper and contributing to the widening trade deficit.
Pakistan’s trade deficit reached $14.6 billion during July-October FY27, with imports standing at $26 billion against exports of $11.4 billion.
Experts also believe that maintaining exchange rate stability may be coming at the expense of remittance inflows, which have continued to grow annually.
They argue that the government and the central bank have yet to introduce an effective policy to channel remittances towards productive economic activities, with the funds instead being used to finance the country’s trade gap.
The SBP data further showed that foreign exchange reserves held by commercial banks increased by $70 million during the week, indicating that inflows into the banking system exceeded outflows.
As a result, the country’s total foreign exchange reserves rose to $26.864 billion, compared with $26.754 billion in the preceding week, marking a weekly increase of $110 million.
