Pakistan’s Foreign Currency Deposits Reach $6.94 Billion

Pakistan's Foreign Currency Deposits Reach $6.94 Billion

Pakistan's foreign currency deposits rose by $69.39 million in August 2026 to reach $6.935 billion, according to data released by the State Bank of Pakistan.

The monthly gain does not reverse the longer trend. Deposits remain $69.69 million, or 0.99 percent, below the $7.004 billion recorded in August 2025.

Residents Down, Non-Residents Up

The composition of the increase is more interesting than the headline figure.

Resident foreign currency deposits stood at $5.865 billion in August, up $13.79 million or 0.24 percent from $5.851 billion in July. But year on year they are down $242.75 million, or 3.97 percent, from $6.108 billion in August 2025.

Non-resident deposits moved the other way and did most of the work. They rose to $1.070 billion, up $55.60 million or 5.48 percent from $1.014 billion in July. On an annual basis they are up $173.06 million, or 19.30 percent, from $896.48 million.

So roughly 80 percent of August's monthly gain came from non-resident holders, and the year-on-year picture is a nearly 20 percent increase in overseas deposits partially offsetting a 4 percent decline in domestic ones.

That divergence has been running for most of the year. Residents have been drawing down foreign currency balances while overseas Pakistanis and non-resident account holders have been adding to them.

Within the resident total, August held $2.017 billion in demand deposits, $1.702 billion in savings deposits and $2.146 billion in time deposits.

The Year in Context

The 2026 trajectory has been choppy rather than directional.

Deposits stood at $6.917 billion in February, slipped to $6.814 billion in March and $6.786 billion in April, then fell further to $6.779 billion in June before recovering through July and August.

That places the current figure roughly back at where the year started, having dipped in the middle. Against December 2025's $6.96 billion, August remains marginally lower.

How the Money Was Used

SBP data shows banks deployed a substantial share of these deposits to meet external and fiscal requirements during the month.

Banks used $920.78 million for pre-shipment financing and $157.59 million for post-shipment financing, together supporting exporters. A further $977.26 million went to import financing.

Banks placed $1.373 billion with the SBP and Pakistani banks. Of that, $411.91 million was held under the Cash Reserve Requirement and $698.07 million under the Special Cash Reserve Requirement. Another $20.49 million sat with banks inside Pakistan and $242.45 million with banks outside the country.

Deposit holders themselves maintained $431.98 million in balances abroad, with a further $236.10 million held as cash in hand.

Why It Matters

Foreign currency deposits held in domestic banks serve a function that is easy to overlook in favour of headline reserve numbers. They increase the availability of foreign exchange within the formal market, which supports exchange-rate stability and reduces reliance on costly short-term external borrowing.

They also behave differently from portfolio flows. Deposits originating from overseas Pakistanis, exporters and internationally connected businesses tend to be relationship-driven rather than yield-chasing, which makes them less prone to rapid reversal during global market stress.

The scale of the underlying opportunity is considerable. Pakistan recorded $38.3 billion in remittances during FY2024-25, its highest ever, with $19.7 billion arriving in the first half of FY2025-26. Only a small fraction of that flow ends up parked in foreign currency accounts within the domestic banking system.

The Signal Worth Watching

The rising non-resident share alongside falling resident balances is the number to track over the next few months.

Growing non-resident deposits suggest overseas Pakistanis are increasingly comfortable holding funds within the domestic system, which is a positive read on confidence. Declining resident deposits are harder to interpret cleanly — they could reflect households converting to rupees amid relative exchange-rate stability, businesses drawing down working capital, or simply weaker dollar accumulation as the currency has held steadier.

Without account-level data, all three readings remain plausible.