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SBP to upgrade printing machines

KARACHI: State Bank of Pakistan (SBP) Governor Tariq Bajwa said on Thursday modern printing machinery will be used to enhance the printing capacity and improve the quality of banknotes.

This was the first visit of the SBP governor to Pakistan Security Printing Corporation (PSPC) after its acquisition by the central bank a couple of months back.

Mr Bajwa said PSPC will have to join hands with SBP-Banking Services Corpora­tion (BSC) and the central bank’s finance department to strength the research and development function.

“We will have to assess the system and upgrade it,” he said.

The SBP acquired the banknote- and prize bond-printing functions of PSPC from the federal government in June.

The governor said the SBP gives utmost importance to the integrity and quality of banknotes along with its timely supply in the system. In order to have full control over the process of banknote manufacturing and issuance, the SBP deemed it necessary to acquire the printing function of PSPC.

The governor added that PSPC will have additional responsibilities in coming years given the increasing need for currency notes due to an expanding economy and the launch of new saving schemes.

Decline in foreign exchange reserves continue

KARACHI: Foreign exchange reserves held by the country continued their downward slide last week, the State Bank of Pakistan (SBP) reported on Thursday.

Total liquid reserves dropped by $88 million to $19.94 billion on Aug 11.

The breakdown of foreign reserves showed that those held by the SBP amounted to $14.31bn while the holdings by commercial banks were $5.63bn.

APP attributed the decline in part to payments on external debt servicing as well as “other official payments”.

This is the lowest level the reserves have touched since June 2016. Reserves have been in decline since October 2016 when they hit the peak of $24.4bn.

Reserves held by banks, on the other hand, have hit a six-year high. Commercial banks have significantly increased short-term borrowing of foreign exchange in recent months. This is part of their efforts to replenish dollar liquidity in the face of a stable exchange rate amidst a growing current account deficit and falling reserves.

The SBP has sounded a note of caution on these increasing levels in subsequent reports, pointing out in one quarterly report that the level of short-term dollar borrowing by banks was approaching $875 million.

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Azhar Hashmi

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