By Moaaz Manzoor

Pakistan's foreign exchange reserves retreated in June after climbing to a one-year high at the end of May, although the country's external reserve position remained substantially stronger than it was a year earlier, according to the latest data released by the State Bank of Pakistan (SBP).

Provisional SBP figures show total liquid foreign exchange reserves stood at $21.48 billion on June 19, down from $22.74 billion a week earlier. The decline was entirely due to a fall in the central bank's holdings, which dropped from $17.22 billion to $15.92 billion during the week, while commercial banks' reserves increased slightly from $5.52 billion to $5.57 billion.

The weekly decline followed a strong improvement in May, when Pakistan's total liquid foreign exchange reserves reached $22.11 billion, the highest month-end level recorded during FY2025-26. That represented an increase of $2.84 billion, or nearly 15%, from $19.27 billion at the end of June 2025, indicating a marked strengthening in the country's external liquidity position over the course of the fiscal year.

The recovery was driven primarily by the SBP's reserves, which increased to $17.19 billion at the end of May from $14.51 billion at the close of June 2025. In comparison, commercial banks' net foreign exchange reserves rose only modestly, from $4.76 billion to $4.92 billion over the same period, highlighting that the improvement in Pakistan's reserve position came largely through the central bank's holdings.

The month-end data also show that reserves strengthened gradually through most of FY2025-26. Total liquid reserves increased from $20.84 billion in December 2025 to $21.33 billion in March 2026 before easing to $20.80 billion in April and rebounding to $22.11 billion in May. The SBP's own reserves followed a similar pattern, rising from $16.05 billion in December to $16.38 billion in March, dipping to $15.85 billion in April and recovering sharply to $17.19 billion in May.

The latest figures also underline the broader recovery in Pakistan's external buffers over the past three fiscal years. Total liquid foreign exchange reserves stood at $9.16 billion at the end of FY2022-23 before rising to $14.00 billion in FY2023-24, $19.27 billion in FY2024-25 and $22.11 billion by the end of May 2026.

The SBP publishes foreign exchange reserve data regularly as an indicator of the country's external liquidity and its capacity to meet external financing obligations. While the latest weekly figures point to some moderation after May's peak, the broader trend shows Pakistan entered the final weeks of FY2025-26 with a considerably stronger reserve position than it had a year earlier.

Credit: INP-WealthPk