- State Bank reserves rose $28 million, standing $14.30 billion, sustaining critical economic stability
According to the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) survey, the global foreign exchange (FX) reserves were recorded $ 12.53 trillion. It was declined to about $12.36 trillion in late 2024, a 3.0 percent drop from the previous quarter. This decline was largely because of the depreciation of major reserve currencies against the US dollar. China and Japan hold the largest reserves, with China having the highest reserves globally, while the US dollar remains the dominant currency.
| Pakistan: Liquid Foreign Exchange Reserves (week-end levels, MN US$) | |||
|---|---|---|---|
| End Period | Net Reserves With SBP | Net Reserves With Banks | Total Liquid FX Reserves |
| 1-Aug-25 | 14,231.9 | 5,263.7 | 19,495.6 |
| 8-Aug-25 | 14,243.2 | 5,253.5 | 19,496.7 |
| 15-Aug-25 | 14,256.2 | 5,314.6 | 19,570.8 |
| 22-Aug-25 | 14,274.3 | 5,343.5 | 19,617.8 |
| 29-Aug-25 | 14,302.5 | 5,357.0 | 19,659.5 |
In the dynamic landscape of global finance experts recorded that foreign exchange reserves represent a cornerstone of economic stability and resilience for countries around the world. Held by central banks, these reserves are greater than mere accumulations of foreign currencies; they are strategic assets that safeguard a nation’s economic interests against external shocks and uncertainties.
Effective management of foreign exchange reserves is, therefore, a critical function of central banking, demanding a nuanced understanding of the global financial market and its myriad risks. It is said that the essence of sound foreign exchange reserve management lies in its ability to balance and align with a nation’s specific economic needs and policies. It encompasses a proactive approach to ensure that adequate official public sector foreign assets are available, accessible, and effectively controlled through the authorities.
No doubt, the primary aims of this management are multifarious, yet interconnected. Firstly, it aims to bolster and sustain confidence in the national strategies governing monetary and exchange rates, counting interventions to support the national currency. Secondly, it seeks to diminish external vulnerabilities through creating a buffer capable of absorbing shocks during periods of international or domestic distress, chiefly when access to borrowing is constrained. This aspect is vital in instilling market confidence that a nation can meet its external obligations effortlessly. Furthermore, effective reserve management supports the government’s foreign exchange needs, encompassing essential imports and international debt obligations.
Presently the State Bank of Pakistan’s (SBP) foreign exchange reserves grew $28 million during the week closed August 2025, standing $14.30 billion. Pakistan’s total liquid foreign reserves stood at $19.66 billion. Of this, commercial banks held $5.36 billion in net reserves. Experts recorded that sustaining reserves above $14 billion is critical for our economy as it navigates external financing requirements and debt repayments in the coming months. The reserves of $19.66 billion offer import cover for only 2.32 months.
Furthermore, following its fundraising of Rs551.97 billion through auctions of government securities, the SBP conducted two separate open market operations (OMOs) presently to inject liquidity into the financial system, using both conventional and Shariah-compliant instruments. It is also recorded that in the Shariah-compliant Mudarabah-based OMO, the State Bank injected Rs10 billion (face value) for a four-day tenor at a return of 11.14 percent per annum. No doubt, foreign exchange reserves are the lifeblood of Pakistan’s economic stability and growth. They are essential for sustaining exchange rate stability, cushioning against external shocks, facilitating international trade, and attracting foreign investment. Effective management of these reserves, by diversification, transparency, and prudent borrowing, is crucial for their success.
As Pakistan faces various economic challenges, including trade imbalances, debt obligations, and exchange rate pressures, the role of foreign exchange reserves becomes even more critical. By addressing these challenges and continuing to implement strategies that enhance reserves, Pakistan can position itself for sustained economic growth and prosperity.