Pakistan, Saudi Arabia sign $3bln deposit agreement in SBP

Pakistan and Saudi Arabia has signed an agreement for the deposit of $3 billion in the State Bank of Pakistan (SBP) on Monday.

The deposit comes at a time when the rupee hit a new historic low against the US dollar in the inter-bank market on Monday with foreign currency reserves held by the SBP also falling by nearly $700 million on a weekly basis. Many see the inflows from Saudi Arabia as a positive for the currency market.

As per a statement by the SBP, the deposits will help support Pakistan’s foreign currency reserves and contribute towards resolving the adverse effects of the Covid-19 pandemic. 

The statement by SBP reveals that the agreement was signed by the Chief Executive Officer of Saudi Fund for Development (SFD) H.E. Sultan Bin Abdul Rahman Al-Marshad and the SBP Governor Dr Reza Baqir at SBP in Karachi.

“Under this deposit agreement, SFD shall place a deposit of $3.0 billion with SBP. The deposit amount under the agreement shall become part of SBP’s Foreign Exchange Reserves,” read the statement.

“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,” concluded the statement.