SBP Dollar Purchases Drop to 16‑Month Low in May
The State Bank of Pakistan bought only $154 million of dollars in May, the smallest monthly purchase since January 2025, as demand for foreign currency rose ahead of Hajj and the central bank aimed to avoid further pressure on the rupee.
Share
Desk Analysis
How This Affects the Exchange
Sector Effect
Positive · Buy bias
Lower SBP dollar purchases indicate a stable rupee and supportive external balances, creating a buy bias for the broader market.
Sectors & Direction
Desk read
Desk call: Buy bias · Positively affected
- EconomyPositively affected
- MarketsPositively affected
Companies
Mentions in This Briefing
Sectors: Economy, Markets — Positive · Buy bias. PSX tickers: MEBL, MCB, UBL, HBL, BAHL, FABL. Lower SBP dollar purchases indicate a stable rupee and supportive external balances, creating a buy bias for the broader market.
Full Story
Open on ProPakistani## SBP’s May Dollar Purchases
The State Bank of Pakistan (SBP) reduced its inter‑bank foreign‑exchange market purchases to $154 million in May, marking the lowest monthly amount since January 2025. By comparison, the bank bought $635 million in April. Cumulative purchases for the first 11 months of fiscal year 2026 totalled $7.3 billion, a slight rise from $7.2 billion in the same period last year.
## Reasons Behind the Decline
Analysts attribute the sharp fall in May to heightened demand for dollars from travellers heading to Saudi Arabia for Hajj. With dollar supply tightening in the market, the SBP chose to scale back its buying to prevent additional depreciation pressure on the Pakistani rupee.
## Reserve Position and Outlook
The central bank’s foreign‑exchange reserves stood at $17.2 billion at the end of May. Strong remittance inflows and a narrowed current‑account deficit have bolstered Pakistan’s external position. SBP expects reserves to surpass $21 billion by the end of fiscal year 2026.
## Current‑Account and Remittance Trends
Pakistan’s current‑account deficit narrowed to $328 million in July, a 60 % drop from June and 38 % lower year‑on‑year. The deficit is projected to stay between 0 % and 1 % of GDP in FY 2027. Remittances from overseas Pakistanis topped $41 billion in FY 2026 and are forecast to reach $44 billion in FY 2027, supporting external stability.
## Implications for Markets
A reduced intervention by the SBP signals a relatively stable rupee environment and reinforces confidence in Pakistan’s external balances. Continued remittance strength and a modest current‑account gap suggest a supportive backdrop for equity investors.
## Outlook
The Finance Ministry expects external sector conditions to remain broadly supportive, aided by stronger exports—particularly in textiles—steady remittance flows, and ongoing export‑facilitation measures.