Crisis of foreign reserves deepens

KARACHI - The total liquid foreign reserves held by the country stood at $8.135 billion on September 27, 2008, registering a sharp decline. According to the break-up of the foreign reserves position, foreign reserves held by the State Bank of Pakistan amounted to $4.685 billion while net foreign reserves held by banks (other than SBP) stood at $3.449 billion. Agencies add: Foreign reserve crisis deepened further as the SBP said it had lost around $700 million in just a week. The Bank's net foreign reserves fell to around $8.1 billion against 8.8 billion, SBP said in a statement. The trend of declining reserves sent the rupee down to 78.50 against the US dollar, compared with 78.30 on Tuesday. The markets were closed from Wednesday to Friday due to Eidul Fitr. 'This is one of the biggest declines in just one week,' said trader Malik Bostan, President of Forex Association of Pakistan. The plunge in reserves from over 16 billion dollars just nine months ago brought the country's ratings to negative among the leading credit rating agencies such as Moody's and Standard & Poor. Both agencies expect Pakistan is close to defaulting on its commitments of external loan repayments. A 15-nation grouping called 'Friends of Pakistan' is scheduled to meet Tuesday in Dubai to discuss the country's 15-billion-dollar bailout request. Meanwhile, the SBP says it has received a $500 million loan from the Asian Development Bank to help shore up the country's ailing economy. SBP spokesman Syed Wasimuddin said on Saturday the money is the first installment of a $1.5 billion loan designed to support economic development in Pakistan. The funds will top up Pakistan's foreign currency reserves and help restore some confidence in its sagging currency. Pakistan also faces high inflation and slowing growth.

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