KARACHI: The foreign exchange reserves, held by the central bank, increased 22.88% on a weekly basis, breaking a five-week losing streak and crossing the $8-billion mark, according to data released by the State Bank of Pakistan (SBP) on Thursday.

Earlier, the reserves plunged to $6,636.1 million, which raised concern over Pakistan’s ability to meet its financing requirements. However, the first tranche of $1 billion from the United Arab Emirates (UAE) and the last tranche of $1 billion from Saudi Arabia for balance of payments support pushed the reserves above $8 billion.

Moreover, China and the UAE have agreed to provide more cushion for the fast depleting reserves.

On January 25, the foreign currency reserves held by the SBP were recorded at $8,154.3 million, up $1,518.2 million compared with $6,636.1 million in the previous week.

The increase came as a result of $1,000 million each in inflows, received by the SBP, from Saudi Arabia and the UAE.

After taking into account the outflows relating to external debt and other official payments, the SBP’s reserves increased $1,518 million during the week under review.

Overall, the liquid foreign currency reserves, held by the country, including net reserves held by banks other than the SBP, stood at $14,802.5 million. Net reserves held by banks amounted to $6,648.2 million.

In November last year, Chinese Embassy Deputy Head of Mission Zhao Lijian assured Pakistan of a financial package to boost its flagging foreign currency reserves, hinting that it would be bigger than that pledged by Saudi Arabia.

China also agreed to immediately give a loan of $2 billion to Pakistan, a move meant to provide much-needed breathing space to the new government.
Earlier, the reserves dipped to $9.06 billion, forcing the central bank to let the rupee depreciate massively for the fourth time since December 2017 and sparking concern about the country’s ability to finance a hefty import bill as well as meet debt obligations in coming months.

In April, the SBP’s reserves increased $593 million due to official inflows. A few months ago, the reserves surged due to official inflows including $622 million from the Asian Development Bank (ADB) and $106 million from the World Bank.

The SBP also received $350 million under the Coalition Support Fund (CSF) earlier.

In January last year, the SBP made a $500-million loan repayment to the State Administration of Foreign Exchange (SAFE), China.