Qudsia Bano

Pakistan’s liquid foreign exchange reserves stood at US$19.68 billion as of September 5, 2025, according to the State Bank of Pakistan (SBP). The latest data indicates a modest improvement in the reserve position during the week under review, offering some breathing space for the country’s external account.

The SBP reported that its own reserves rose by US$34 million to US$14.34 billion, while commercial banks held net reserves of US$5.34 billion. Combined, these holdings pushed Pakistan’s total liquid reserves to US$19.68 billion.

Although the increase was modest, it came at a critical time when Pakistan continued to grapple with external financing challenges. Foreign exchange reserves are vital for meeting international payment obligations, including debt servicing and essential imports such as petroleum, machinery, and food commodities. Even limited improvements signal a measure of stability in the country’s external finances.

Over recent months, Pakistan has relied on inflows from multilateral lenders, bilateral support, and a steady rise in workers’ remittances to sustain its reserves. Restrained imports and improved export receipts have also contributed to balancing the current account and providing additional support to reserve accumulation.

The SBP’s reserves holding steady above the US$14 billion mark are viewed as a positive sign, bolstering the country’s ability to navigate exchange rate pressures and absorb external shocks. At present levels, the reserves provide around three months of import cover, which is generally regarded as a reasonable cushion for external stability.

However, economists stressed that sustaining this buffer would require continued fiscal prudence, disciplined external borrowing, and consistent inflows from remittances and exports. Any lapse in these areas could place renewed pressure on reserves in the months ahead.

In its statement, the SBP reiterated that strengthening the country’s foreign exchange reserves remains a key policy priority. With total reserves approaching the US$20 billion mark, Pakistan is better positioned to safeguard financial stability, anchor market confidence, and support economic recovery in the coming months.

Credit: INP-WealthPk