Pakistan builds record reserves amid Gulf war

KARACHI: Despite the Gulf war’s impact on weaker economies and uncertainty over high oil prices, Pakistan’s foreign exchange reserves climbed to a record high of more than $26.8 billion, the State Bank of Pakistan (SBP) reported on Thursday.

The war started on Feb 28, jolting many economies, including Pakistan, but the SBP has since improved its reserves and added over $5bn.

The SBP’s reserves were $16.568bn in February, rising to $21.568bn on Oct 30.

The central bank reported that the foreign exchange holdings of the SBP and commercial banks increased during the week. During the week, SBP reserves rose by $39m.

The financial sector considers the State Bank’s current reserves sufficient to keep the exchange rate stable and to encourage exporters to repatriate export proceeds without delay. A stable exchange rate also provides confidence to importers.

However, currency experts believe the rupee is overvalued, allowing importers to get cheaper dollars, which is why the trade deficit is widening each month.

The trade deficit during July-Oct FY27 reached $14.6bn. The imports were $26bn and exports $11.4bn.

It is also believed that the exchange rate is being kept stable at the expense of remittances, which have been increasing each year.

The government or the State Bank has not devised a policy to use remittances better; instead, they are used to fill the trade gap.

SBP data showed that commercial bank reserves also increased by $70m during the week, reflecting that outflows from Pakistan were less than inflows into the banks.

The State Bank reported that the total reserves of the country reached a record high of $26.864bn, compared to $26.754bn last week, an increase of $110m.

Published in Dawn, November 6th, 2026