The State Bank of Pakistan SBP said on Thursday that the central bank's foreign exchange reserves decreased by 16.1 per cent to $3.09 billion in the week ending Jan. 27, and covers less than three weeks of imports.
The country is locked in negotiations with the International Monetary Fund IMF to release much-needed money under a stalled bailout programme. A successful outcome with the IMF would help with the release of money from other platforms that are looking for a greenlight from the lender.
The drop in reserves was due to external debt repayments, according to the central bank.
The total liquid reserves in the country are $8.74 billion, according to SBP. Reserves held by commercial banks stood at $5.65 billion.
The reserves have been at their lowest since February 2014 and cover only 18 days worth of imports, according to local investment firm Arif Habib Limited AHL.
The country needs fresh inflows and the resumption of the IMF programme as soon as possible to avoid the crisis, said Tahir Abbas, head of research at AHL.
Cash-strapped Pakistan held talks with the International Monetary Fund on Tuesday in a bid to unlock funds from a $7 billion bailout designed to ward off economic meltdown. The talks are intended to clear the 9th review of the Extended Fund Facility by the International Monetary Fund, which is aimed at helping countries with balance-of- payments crises.
The lender had set several conditions for the resumption of the bailout, including a market-determined exchange rate for the local currency and a easing of fuel subsidies. The central bank removed a cap on exchange rates and the government raised fuel prices by 16 per cent.
According to state bank data, the rupee lost 0.93 per cent in the interbank market on Thursday, closing at a new historic low of 271.36 rupees against the U.S. dollar. The rupee dropped 0.18 per cent in the open market.
The rupee is down 24.51 per cent over the year that began in July.