Key Takeaways
- The State Bank of Pakistan's foreign exchange reserves fell by more than USD 1 billion in the first week of FY27.
- Net foreign exchange reserves held by commercial banks also declined by approximately USD 68 million during the same period.
- SBP Governor Jameel Ahmad remains optimistic that reserves will reach USD 20 billion by December 2026.
The State Bank of Pakistan (SBP) reported a significant decline in foreign exchange reserves, with a drop of over USD 1 billion during the first week of fiscal year 27. According to an official report issued on Thursday, SBP’s reserves fell from USD 18.471 billion as of July 3, 2026, to USD 17.226 billion by July 10, 2026.
This decline is attributed primarily to heavy external debt repayments. The report also noted that net foreign exchange reserves held by commercial banks decreased by approximately USD 68 million during the same week, bringing their total down to USD 5.449 billion from USD 5.517 billion a week earlier.
As a result of these changes, Pakistan’s total liquid foreign exchange reserves dropped to USD 22.675 billion by July 10, 2026, compared with USD 23.988 billion in the previous week. Despite this setback, SBP Governor Jameel Ahmad expressed optimism about future trends, stating that the central bank is confident of reaching a reserve target of USD 20 billion by December 2026.
Ahmad highlighted that the increase in reserves has been driven largely by the SBP’s purchases of dollars from the domestic foreign exchange market. He noted that, unlike previous years when the state bank was a net seller of dollars, it is now a net buyer, reflecting improved external sector dynamics supported by higher home remittances inflows.
The governor emphasized the importance of maintaining these positive trends to ensure financial stability and support economic growth in Pakistan. However, he acknowledged that challenges remain, particularly with ongoing debt servicing obligations which continue to impact reserve levels.
While the current situation may cause concern among investors and analysts, SBP’s strategic approach to managing foreign exchange reserves suggests a cautious optimism for future improvements. The central bank continues to focus on building robust financial mechanisms to address external debt repayments while ensuring sustainable growth in the country's economy.
In conclusion, despite the recent decline, Pakistan remains committed to stabilizing its foreign exchange reserves and maintaining economic stability through strategic interventions and improved sectoral dynamics.
The increase in reserves has largely been driven by the SBP’s purchases of dollars from the domestic foreign exchange market.
SBP Governor Jameel Ahmad, Governor, State Bank of Pakistan
