KARACHI – Pakistan’s foreign exchange reserves have surged to $20.03 billion as of July 4, 2025, marking the highest level in nearly three years. The State Bank of Pakistan (SBP) reported that its reserves increased by $1.77 billion during the week, reaching $14.5 billion, while commercial banks held an additional $5.53 billion.
This significant rise in reserves is attributed to several key factors. A substantial increase in remittances, particularly from the United Arab Emirates, has bolstered the country’s foreign currency inflows. Additionally, improved export performance, growth in information technology services, and higher foreign direct investment have contributed to the strengthening of Pakistan’s external position.
The current level of reserves provides an import cover of approximately 2.71 months, up from 1.7 months a year ago and less than one month during the 2022-23 crisis period. This improvement reflects the successful implementation of fiscal tightening measures, including subsidy cuts, enhanced tax mobilisation, and restrictions on non-essential imports, which have helped bring the current account deficit under control.
Economists view this development as a positive signal for Pakistan’s macroeconomic stability, noting that the increase in reserves has the potential to reduce external vulnerabilities, fortify the financial sector, and rebuild investor confidence. However, they caution that sustaining this upward trajectory will require continued prudent economic management and strategic policy reforms.
This story has been reported by PakTribune. All rights reserved.