SBP injects $200m to stabilise rupee

Pakistan’s fast depleting foreign exchange reserves fell to 8.135 billion dollars from 9.129 billion dollars on September 4, putting it at risk of defaulting on foreign loans. The reserves are sufficient to meet just two months of imports, economic expert Rauf Nizamani said, adding that he hoped donors and friends of Pakistan would help the country avert a looming default.

But help could be in short supply given the crisis gripping the global financial system and desperate efforts by governments around the world to shore up failing banks and markets.

The governor of the Pakistan State Bank, Shamshad Akhtar, said in a statement late Tuesday that Pakistan’s banks are able to withstand the global crisis and there is no risk to people’s savings. Banks in Pakistan largely focus on conventional lending and are not exposed to the US subprime mortgages that sparked the current turmoil, Dr Akhtar said.

“There should not be any cause for concern about the stability of the banking system in the coming days,” said Dr Akhtar.

But she appealed to Pakistanis to “cooperate” by not panicking and withdrawing their savings from banks. “(The) public at large should cooperate and should help in channeling liquidity within the formal system,” Akhtar said. The State Bank of Pakistan had injected around 500 million dollars in capital since 2006 to ensure the flow of capital, she said.