ISLAMABAD: Foreign exchanges reserves plunged more than 12 per cent or $1.6 billion just three weeks down the coronavirus fallout on global financial markets, according to the State Bank of Pakistan.
The reserves totalled $11.2 billion on March 27, down from $12.8 billion as on March 6.
Pakistan’s reserves were recently shored up by friendly countries like Saudi Arabia and China. The country had also entered a program with International Monetary Fund.
The situation improved until March aided by inflows into treasury bills that had attracted foreign carry trade money on the back of high interest rates and a fall in imports.
The fall in reserves is due to multiple factors, including panic selling of debt and equities, and reserves are expected to fall further in coming weeks, Sohail said.
Friday data showed a net outflow of $1.9 billion from Pakistan in March through government treasury bills, equity and bonds, more than halving the total net inflow for the ongoing fiscal year which now stands at $1.15 billion. The depletion has also hit the Pakistani rupee, which has dropped 8 per cent in March to 166.5 per dollar as of Friday.
The government in late March asked fuel retailers and refiners to cancel imports from April and increase purchases from national refiners.
“Demand is collapsing for petroleum products because of the lockdowns and the situation we’re in; but this policy is largely driven by the fact that there is pressure on the reserves and the currency,” Sakib Sherani, head of a macroeconomic consultancy firm and a former member of the Prime Minister’s Economic Advisory Council.
