Pakistan finally received on Saturday a $3-billion deposit from Saudi Arabia which will help support the country's foreign currency reserves and also contribute to resolving the adverse effects of the Covid-19 pandemic.

This was confirmed by Advisor to the Prime Minister on Finance and Revenue Shaukat Tarin in a tweet.

"Good news, US$3 billion Saudi deposit received by SBP. I want to thank His Excellency Crown Prince Mohammed Bin Salman and the Kingdom of Saudi Arabia for the kind gesture.

On Monday, Chief Executive Officer of Saudi Fund for Development (SFD) H.E. Sultan Bin Abdul Rahman Al-Marshad and the State Bank of Pakistan (SBP) Governor Dr Reza Baqir had signed an agreement in Karachi for the deposit of $3 billion in the central bank.

"The deposit agreement reflects the strong and special relationship between the Kingdom of Saudi Arabia and Pakistan and will further augment the economic ties between the two brotherly countries,” a statement by the SBP said.

The deposit comes at a time when the rupee hit a new historic low against the US dollar, closing at 176.77 in inter-bank market on Friday.

The country’s total liquid foreign exchange reserves declined by $275 million on a weekly basis, the central bank revealed on Thursday. Total liquid foreign exchange reserves held by the country stood at $22.499 billion on November 26, 2021.

During the week under review, the SBP’s reserves decreased by $244 million to $ 16.01 billion.

Net forex reserves held by commercial banks stood at $6.488 billion, down $31 million in a week.

However, the latest deposit is set to give Pakistan's foreign exchange reserves a boost for the moment. It remains to be seen in the coming weeks if the inflow would arrest the decline of the rupee.

This article was first published in Business Recorder on Dec 4, 2021.