By Moaaz Manzoor

Banks’ foreign currency deposits recorded a slight decline in April 2026, while their overseas borrowings increased during the month, according to the latest data released by the State Bank of Pakistan (SBP).

Foreign currency deposits and overseas borrowings are widely considered important indicators of external liquidity in the banking sector, reflecting banks’ access to dollar funding and the overall availability of foreign exchange within the financial system.

SBP data showed that total foreign currency deposits (FCY) of banks stood at $7.27 billion in April 2026, compared with $7.35 billion in March and $7.26 billion in February.

The decline was mainly driven by a reduction in resident foreign currency deposits held under the FE-25 category, which constitutes the largest component of banks’ foreign currency deposits. FE-25 deposits slipped to $6.79 billion in April from $6.81 billion in March.

Special foreign currency deposits also declined to $181.04 million in April from $235.9 million a month earlier.

Meanwhile, foreign currency value accounts remained broadly stable at $298.46 million in April, compared with $298.94 million in March and $257.78 million in February.

Overall foreign currency deposits earlier reached $7.42 billion in December 2025 before moderating to $7.37 billion in January and $7.26 billion in February.

At the same time, banks’ overseas foreign exchange borrowings increased during April. Total foreign exchange borrowing by banks rose to $3.12 billion from $2.94 billion in March, although it remained below the $3.20 billion recorded in February.

The increase was mainly supported by higher FE-3 borrowing, a category related to banks’ foreign exchange borrowing from external sources, which climbed to $852.61 million in April from $693.86 million in March.

Other foreign borrowings also edged up to $2.27 billion from $2.24 billion a month earlier, although they remained below the $2.71 billion recorded in January 2026.

The SBP data further showed that banks’ combined foreign currency deposits and foreign exchange liabilities stood at $10.39 billion in April, compared with $10.29 billion in March.

The latest figures suggest that although banks experienced a moderation in foreign currency deposits during April, continued access to overseas borrowing helped support overall foreign exchange liquidity within the sector.

Credit: INP-WealthPk