Pakistan’s foreign reserves crisis deepensOctober 4th, 2008 - 5:48 pm ICT by IANS
Karachi, Oct 4 (DPA) Pakistan’s foreign reserve crisis deepened further Saturday as the central bank said it had lost around $700 million in just a week.The State Bank of Pakistan’s net foreign reserves fell to around $8.1 billion against $8.8 billion, the bank said in a statement Saturday.
The trend of declining reserves sent the Pakistani rupee down to 78.50 against the US dollar, compared with 78.30 Tuesday.
The markets were closed from Wednesday to Friday due to Muslim festival of Eid-ul-Fitr.
Out of the $8.1 billion around $4.68 billion are the central bank’s own reserves while the rest are deposits of private financial institutions.
“This is one of the biggest declines in just one week,” said trader Malik Bostan, president of Forex Association of Pakistan.
Last week the Asian Development Bank approved a tranche of $500 million to Pakistan for balance of payments support but it hasn’t arrived yet.
The plunge in reserves from over $16 billion dollars just nine months ago brought the country’s ratings to negative among the leading credit rating agencies such as Moody and Standard & Poor.
Both agencies expect Pakistan is close to defaulting on its commitments of external loan repayments.
A 15-nation grouping called “Friends of Pakistan” is scheduled to meet Tuesday in Dubai to discuss the country’s $15-billion dollar bail-out request.
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Tags: asian development bank, balance of payments, credit rating agencies, eid ul fitr, external loan, loan repayments, muslim festival, pakistani rupee, private financial institutions, state bank of pakistan