Pakistan's forex reserves fall to $10.95 bln

ISLAMABAD, June 12 (Reuters) - Pakistan's foreign reserves fell by $224 million to $10.954 billion in the week that ended on June 7, said the central bank.

Reserves held by the State Bank of Pakistan fell by $297 million to $8.387 billion, while those held by commercial banks rose to $2.567 billion from $2.494 billion.

Pakistan's foreign exchange reserves hit an all-time high of $16.486 billion on Oct. 31, 2007, but have fallen since then because of political uncertainty, beginning when President Pervez Musharraf imposed six weeks of emergency rule on Nov. 3.

Foreign investors remained cautious after the assassination of former prime minister Benazir Bhutto on Dec. 27.

While February elections were generally smooth, cracks have appeared in the new ruling coalition, while uncertainty about Musharraf's future lingers.

The central bank last month increased its key discount rate to 12.0 percent from 10.5 percent, to counter accelerating inflation and widening fiscal and current account deficits.

Central bank Governor Shamshad Akhtar said last month foreign inflows of up to $3.5 billion were expected in the short- to medium-term, most of it in the form of loans from multilateral lenders and friendly governments. (Reporting by Sahar Ahmed; Editing by Simon Cameron-Moore)