Banks are losing ground in their foreign currency deposits due to the economic conditions affecting the world. Part of the reason is that they have had to withdraw their dollars from their overseas accounts in order to meet the demands of the customers’ at home. The shortage of dollars has been causing an uproar, forcing the banks to deplete their deposits to meet the needs and demands of importers among other entities. The dollar is in demand due to the high trade deficit and falling investment flows.

Usually the investment flows fill in this deficit gap, but with the small amount of capital that has been coming in, the banks had no choice. Countries like Pakistan have their money in banks in London and New York and their foreign government investments are in short-term papers. Other banks have their money in different overseas banks. Once the economy gets back on track, the banks will be able to replenish their funds.