The country is locked in negotiations with the International Monetary Fund (IMF) to release much-needed money under a stalled bailout programme. A successful outcome with the IMF would also help to release money from other platforms that are looking for a greenlight from the lender. The central bank said in a statement that the drop in reserves was due to external debt repayments. Reserves held by commercial banks stood at $5.65 billion, taking total liquid reserves in the country to $8.74 billion, SBP added.
Local investment firm Arif Habib Limited (AHL) calculated that the reserves are at their lowest since February 2014 and now only cover 18 days worth of imports, the lowest the import cover has been since 1998.
"The country is in dire need of fresh inflows and the resumption of the IMF programme as soon as possible to avoid the crisis," Tahir Abbas, head of research at AHL said.
Cash-strapped Pakistan on Tuesday held talks with the IMF in
a bid to unlock funds from a $7 billion bailout designed to ward
off economic meltdown. The talks, to continue through Feb. 9,
are meant to clear the IMF's 9th review of its Extended Fund
Facility, aimed at helping countries with balance-of-payments
crises.
The lender had set several conditions for resuming the
bailout, including a market-determined exchange rate for the
local currency and an easing of fuel subsidies. The central bank
recently removed a cap on exchange rates and the government
raised fuel prices by 16%.
During Thursday trading, the rupee lost 0.93% in the
interbank market, closing at a new historic low of 271.36 rupees
against the U.S. dollar, according to state bank data. The rupee
also dropped 0.18% in the open market.
Overall, the rupee is down 24.51% over the fiscal year that
began in July.
(Reporting by Gibran Peshimam in Islamabad and Ariba Shahid in
Karachi; Editing by Alex Richardson and Sharon Singleton)
