SBP Buys Over $20 Billion in 3 Years
SBP Buys Over $20 Billion in 3 Years: State Bank of Pakistan has taken major steps to ensure currency and economic stability through its foreign exchange operations according to the latest Monetary Policy Committee meeting held on October 27, 2025, the central bank kept its policy rate steady at 11 percent this decision aligned with market expectations, signaling the SBP’s balanced approach toward inflation and growth management in a recovering economy.
The SBP highlighted in its report that it has purchased over 20 billion dollars from the market over the past three years. This large-scale dollar buying demonstrates a proactive effort to maintain the value of the rupee and strengthen foreign exchange reserves. Such actions have become a cornerstone of Pakistan’s monetary stability strategy, ensuring sufficient liquidity while supporting external payments and repatriations.
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| Indicator | Details (FY25–FY26) |
|---|---|
| Policy Rate | 11% (kept unchanged in October 2025) |
| Dollar Purchases | Over $20 billion bought in three years |
| GDP Growth Projection | 3.25% – 4.25% expected for FY26 |
| IMF Disbursement | $1.2 billion expected by December 2025 |
| Debt Repayments | $3.1 billion repaid out of $10 billion due |
| Remittances Forecast | Expected to exceed $41 billion in FY26 |
| Inflation Outlook | May exceed target temporarily in mid-FY26 |
SBP Policy Rate Decision and Market Confidence
Keeping the policy rate unchanged at 11 percent reflects the SBP’s focus on maintaining financial discipline while avoiding unnecessary economic shocks. Analysts had already predicted no change in the rate as inflation showed mixed patterns across sectors, and the need for gradual stabilization remained a top priority.
By maintaining the same rate, the SBP aims to preserve investor confidence while keeping borrowing costs manageable for businesses. It also indicates the central bank’s confidence that current monetary conditions are adequate to support moderate growth while containing inflation expectations.
SBP’s Active Role in Dollar Buying and Forex Market
Over the past three years, the State Bank of Pakistan has actively intervened in the foreign exchange market to reduce volatility. Through continuous dollar purchases, the SBP has added more than 20 billion dollars to its reserves, providing a strong cushion against external shocks.
These purchases are made after meeting all obligations such as debt repayments and repatriations. This means the bank only accumulates surplus dollars to strengthen reserves, ensuring Pakistan can maintain external payments even during global uncertainties. The move also discourages speculation in the currency market and supports the rupee’s gradual stabilization.
How Dollar Purchases Strengthen Pakistan’s Foreign Exchange Reserves
The central bank’s dollar buying serves as a critical tool for managing the supply and demand of foreign currency in the market. This action increases Pakistan’s overall reserve levels, reducing dependency on short-term inflows and external borrowing. As a result, the SBP gains more control over monetary stability and the exchange rate mechanism.
Additionally, a strong reserve position improves investor sentiment and enhances Pakistan’s creditworthiness with global lenders. The SBP’s approach of buying dollars consistently while keeping repayments on track helps establish a more sustainable financial buffer for future challenges.
Key Insights from SBP’s Latest Monetary Policy Announcement
- SBP purchased over 20 billion dollars from 2022 to 2025 to stabilize the rupee
- Policy rate remains steady at 11 percent in October 2025
- GDP growth projected between 3.25 and 4.25 percent for FY26
- Over 3.1 billion dollars in repayments already completed out of 10 billion due
- Remittances expected to exceed 41 billion dollars during FY26
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Impact of Dollar Purchases on the Rupee’s Stability
Pakistan’s rupee has faced several external challenges, including global oil price volatility and post-flood economic adjustments. The SBP’s strategic dollar purchases have helped reduce pressure on the rupee, preventing sharp devaluations and speculative attacks.
This intervention ensures that the rupee maintains a predictable range, allowing businesses to plan imports and exports with more certainty. It also enhances the credibility of the central bank in maintaining stability despite fluctuating global conditions. The SBP’s long-term strategy indicates a focus on gradual improvement rather than short-term fixes.
Economic Growth Forecast: SBP Upgrades FY26 Outlook
The latest monetary policy statement revealed an encouraging projection for Pakistan’s economic growth. The SBP now expects GDP to expand within the upper half of the 3.25 to 4.25 percent range during FY26. This is an improvement from earlier forecasts that were affected by concerns over floods and agricultural disruptions.
Improved crop yields, stable energy supplies, and a gradual recovery in industrial activity are expected to contribute to this stronger growth outlook. The SBP believes that its monetary and exchange rate measures have created a supportive environment for sustained expansion.
IMF Review and $1.2 Billion Disbursement Expected by December
The SBP governor confirmed that Pakistan has met all conditions for the next International Monetary Fund review. A board meeting is anticipated by December 2025 to approve the next tranche of 1.2 billion dollars, which will further boost foreign reserves and investor confidence.
This positive development also reflects Pakistan’s improved fiscal discipline and commitment to policy continuity. Meeting IMF criteria ensures smooth financial flows from other international partners and reassures global markets about the country’s macroeconomic direction.
External Account Stability and Debt Repayments
Pakistan has already cleared 3.1 billion dollars of external repayments for FY26, out of a total 10 billion due. This timely repayment demonstrates financial discipline and strengthens the country’s credit standing internationally.
The SBP expects the current account deficit to remain within 0 to 1 percent of GDP. This manageable level indicates that the government’s policies on imports, remittances, and exports are well-aligned. A smaller deficit also reduces the need for excessive borrowing, making the economy more resilient to shocks.
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Role of Remittances in Supporting the Economy
Remittance inflows remain one of the strongest contributors to Pakistan’s external account stability. The SBP forecasts that overseas Pakistanis will send over 41 billion dollars during FY26, marking a steady increase from previous years.
These inflows not only strengthen the balance of payments but also help families manage inflationary pressures. Combined with controlled imports and a moderate rise in exports, remittances ensure a more stable foreign exchange position for the country.
Important Economic Indicators for FY26
- GDP expected between 3.25 to 4.25 percent
- Inflation may exceed target temporarily in mid-FY26
- Current account deficit projected below 1 percent of GDP
- Remittances likely to surpass 41 billion dollars
- Oil price fluctuations remain a key risk factor
Inflation Trends and Future Risks
The central bank has warned that inflation could temporarily exceed its target range during the second half of FY26. However, the situation is expected to improve in FY27 as supply conditions stabilize and monetary tightening shows its effects.
One of the major risks identified is the potential increase in global oil prices. Any sudden spike could increase import bills and add pressure on inflation. The SBP remains ready to adjust policies as needed to manage such risks without disrupting economic growth.
SBP’s Strategy to Build Long-Term Economic Confidence
By focusing on steady reserve accumulation and a consistent monetary policy, the SBP aims to restore and maintain investor confidence. Its actions send a clear signal to the market that Pakistan’s economic direction is stable, predictable, and resilient.
This consistency is vital for attracting both domestic and foreign investments. A stronger rupee, controlled inflation, and sustainable growth can encourage long-term commitments from businesses and international partners, supporting overall development.
Market Response and Analyst Opinions
Financial experts have largely welcomed the SBP’s decision to maintain rates and continue reserve-building measures analysts believe the bank’s proactive dollar buying has successfully prevented panic-driven market behavior maintaining overall stability.
Investors are now showing greater confidence in Pakistan’s currency and bond markets, while improved macroeconomic data supports positive outlooks from global rating agencies. The central bank’s credibility has been further strengthened through transparent communication and consistent policy moves.
Key Takeaways on SBP’s Dollar Buying and Economic Stability
- SBP’s 20 billion dollar purchase over three years strengthens the rupee and builds reserves
- Policy consistency supports investor confidence and stable market conditions
- GDP growth projections for FY26 are stronger due to improved economic indicators
- IMF support and timely repayments enhance external stability
- Inflation control and oil price management remain crucial for FY27 outlook
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