Pakistan To Inject $3.5 Billion To Stabilize Foreign Exchange Market

Karachi, Pakistan (AHN) - Pakistan expects to inject $3.5 billion into the country's banking system in the short and medium-term to keep the foreign exchange market stable.

Foreign exchange inflows to the tune of $3-3.5 billion are expected to come in the interbank foreign exchange market during the periods, Dr Shamshad Akhtar, governor of the State Bank of Pakistan (SBP), the country's central bank, said on Friday.

These flows coupled with joint efforts of SBP and commercial banks will further stabilize the parity of the Pakistani Rupee in relation to the U.S. dollar and calm down foreign exchange markets, the central bank said in a statement.

The SBP chief assured the country's commercial banks at a meeting that there will be no reversal of foreign exchange liberalization measures as experienced in past years.

Akhtar, however, expressed concern over excessive volatility and the weakened exchange rate. She said that the recent behavior of the exchange market is totally out of line.

Akhtar informed the meeting that the government has taken steps to mobilize foreign funds.

She also added that some of the inflows expected soon include $2.1 billion from Multilateral Banks, $500 million from friendly countries, $200 million for earthquake relief, $100 million from the United Kingdom, $700 million from MCB Bank's stake sale, $100 million from Barclays Bank and the rest through private sector and other regular sources.