F

Glossary · PSX term

Foreign exchange reserves.

Foreign exchange reserves are the foreign currency a country holds, managed by its central bank.

Definition

Pakistan's reserves, held by the SBP, back the rupee and cover imports and external debt payments, so low reserves raise the risk of currency stress. Markets track reserves and import cover as a gauge of stability.

Worked example

If SBP reserves cover only a few weeks of imports, investors worry about rupee and external stability.

Related on PSX Clarity

Rupee depreciation

Current account deficit

State Bank of Pakistan (SBP)

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