{
  "$type": "site.standard.document",
  "bskyPostRef": {
    "cid": "bafyreieyfm3eslaf64yejgmzgoxf7earzrry4suxj5ifxcd4diisurizi4",
    "uri": "at://did:plc:qdzcgmgri7npfs46puqpnnjo/app.bsky.feed.post/3mnja7ngdyxc2"
  },
  "coverImage": {
    "$type": "blob",
    "ref": {
      "$link": "bafkreibthogn7r4ajtbv4tkkrffqubtr2yagarhcy4wkzplhmu56jde77a"
    },
    "mimeType": "image/webp",
    "size": 27706
  },
  "path": "/news/2005286/soaring-trade-gap-emerges-as-black-hole-for-dollars",
  "publishedAt": "2026-06-05T02:20:28.000Z",
  "site": "https://www.dawn.com",
  "tags": [
    "Business"
  ],
  "textContent": "KARACHI: The foreign exchange reserves of the State Bank are inching close to the target of $18 billion for current fiscal year (FY26), but a widening trade deficit threatens to erase the growth in reserves and remittances.\n\nData issued by the central bank on Thursday showed that the forex reserves increased by $43 million to $17.2bn during the week ending on May 29.\n\nFinancial experts see the improvement in reserves as a good sign, but at the same time they fear the widening trade imbalance would lead to a large current account deficit this fiscal year.\n\nThey also pointed out that substantial payments to foreign creditors are due this month.\n\n> SBP forex reserves are nearing their annual target, but large payments are also due this month\n\nJune which means still a month is available to the SBP to catch the target of $18bn.\n\nThe State Bank has been purchasing dollars from the inter-bank market to improve reserves and make external payments, while the exchange rate is being managed through a steady uptick in the rupee’s value against the dollar.\n\n“More important is the managed exchange rate, which may burst after June after large payments are made before the end of the fiscal year on June 30,” said Atif Ahmed, a currency expert.\n\nHe added that since the dollar has been appreciating against all regional currencies except Pakistan’s, it is obvious the rupee is under depreciation pressure.\n\nAccording to Atif, the purchase of dollars from the inter-bank market by SBP makes no difference to the dollar rates since the price mechanism in banking market does not exist anymore. “The rate is determined by the central bank.”\n\n**Alarming deficit**\n\nFinancial experts said the growing trade deficit would affect both the exchange rate and the current account deficit. The current account had a surplus of $1.8bn in FY25.\n\n“The trade deficit for the 11 months of FY26 has soared to $35bn, which is seen as alarming by economic managers of the country. It will definitely take the current account deficit to an unexpected level, putting pressure on the rupee to depreciate against the dollar,” said a financial expert.\n\nHe recalled that the Indian rupee fell from Rs86 to Rs95 in a year. The trade deficit rose by 17.48pc to $34.76bn in July-May 2025-26, up from $29.58bn over the corresponding period last year: a rise of $5.18bn.\n\nCurrency dealers have already predicted a slowdown in remittances, which means the target of $41bn would be hard to achieve in FY26.\n\n“The remittances depend upon the situation in Middle East as more than 50 per cent remittances come from this region,” said the expert.\n\nHe said the ministry of finance is responsible for such a large trade deficit and would face a tough time in FY27 with higher current account deficit,” he added.\n\nThe import bill went up to $62.66bn, mainly due to an increase in import of luxury items and foodgrain.\n\nThe country’s total foreign exchange reserves at the end of last month were $22.63bn, including $5.44bn held by commercial banks.\n\n_Published in Dawn, June 5th, 2026_",
  "title": "Soaring trade gap emerges as black hole for dollars"
}