By Abdul Ghani

Pakistan’s total foreign exchange reserves rose to $21.3 billion by the end of the review period, while net foreign direct investment (FDI) inflows increased during July-January FY26, according to the Monthly Economic Update & Outlook February 2026 released by the Ministry of Finance.

The report states that the country’s total liquid foreign exchange reserves stood at $21.3 billion, including $16.2 billion held by the State Bank of Pakistan (SBP). The reserve position reflects external inflows and overall balance of payments developments during the fiscal year.

Net FDI inflows showed improvement during the first seven months of FY26. The report highlights that inflows were directed toward key sectors, including power and financial business, indicating sectoral concentration in investment patterns.

The increase in FDI inflows contributed to supporting the external account and strengthening the reserve position. Capital inflows in the form of foreign investment play a role in supplementing foreign exchange availability alongside trade and remittance flows.

Sector-wise, the power sector attracted a significant share of foreign investment during July-January FY26. Investment in financial business also recorded inflows, reflecting activity in banking and related segments. The concentration of inflows in these sectors indicates continued investor interest in energy and financial services.

The reserve level of $21.3 billion indicates the country’s foreign exchange buffer during the review period. The SBP-held reserves of $16.2 billion represent the central bank’s share within the total stock.

The report presents the improvement in FDI alongside broader external sector indicators, including remittances and trade performance. While the trade deficit widened during the period, capital inflows and remittances contributed to overall external stability.

The strengthening of foreign exchange reserves reflects cumulative developments in the balance of payments during FY26. Net FDI inflows and other external receipts supported the build-up of reserves during the review period.

Overall, the data show that foreign exchange reserves and foreign investment inflows recorded positive movement during July-January FY26, contributing to the country’s external position as the fiscal year advances.

Credit: INP-WealthPk