Governor of Pakistan’s Central Bank Confident in Forex Reserve Recovery

State Bank of Pakistan (SBP) Governor Dr Reza Baqir has said the ongoing decline in foreign exchange reserves is concerning, but remained confident that a rollover of loans would be seen in the coming days, and that, along with other central bank measures, would boost market sentiment.

"The fall in reserves is concerning, but we are confident that actions taken by the central bank would halt further deterioration," he said while talking to a private TV channel.

Reserves held by the central bank decreased by $728 million to reach $11.32 billion as of April 1, 2022, revealed data released by the SBP on Thursday.

The decrease comes "largely due to debt repayment and government payment pertaining to the settlement of an arbitration award related to a mining project", said the SBP.

The rupee also fell to record lows during the outgoing week, prompting the central bank to act, which began by raising the key interest rate, announcing a 100% cash margin on the import of 177 items with immediate effect, and increasing the markup rate for financing under Export Finance Scheme (EFS) by 2.5%.

Dr Baqir said that figure for the month of March revealed that both core and headline inflation increased. "Headline inflation jumped from 12.2% in February to 12.7% in March, whereas core inflation also saw a big rise," he said.

Dr Baqir said that after analysing the data, the central bank reached a decisive decision to reduce the inflation rate, improve foreign exchange reserves, and boost the business community's confidence.

Source: Business Recorder