KARACHI: The Pakistani rupee gained for the second consecutive session to reach Rs238.84 against the dollar on Monday as the government officials outlined measures to reduce pressure on the economy.
The local unit gained 53 paisas to close at Rs238.84 to the dollar from Friday’s closing of Rs239.37 in the interbank foreign exchange market.
The finance ministry and the State Bank of Pakistan (SBP) on Sunday issued a joint press release about Pakistan’s strategy for navigating fiscal year 2022/23.
“On July 13, the critical milestone of a staff-level agreement on completing the next International Monetary Fund (IMF) review was reached. As of today, all prior actions for completing the review have been met, and the formal board meeting to disburse the next tranche of $1.2 billion is expected in a couple of weeks,” it said.
“With the recent rains and storage of water in the dams, hydroelectricity is also likely to increase and the need to generate electricity on imported fuel is expected to decline going forward,” it added.
The analysts said that positive sentiments prevailed in the market amid the joint statement by the central bank and the finance ministry regarding the likely recovery of the macroeconomics and appreciation of the local currency in the market.
However, they said that the reduced inflows and higher payments in the import bills have resulted in the foreign exchange reserves declining to an alarmingly low level, which remain a major threat to the stability in the value of the rupee.
A threat to the stability in the value of the local currency will remain until Pakistan secures funds from multilateral lenders and friendly countries to boost its foreign exchange reserves, analysts said.
The foreign currency reserves held by the SBP recorded a decline of $754 million to clock-in at $8.57 billion during the week ended on July 22, compared with $9.32 billion on July 15. According to the central bank, the decrease came due to external debt and other payments.
The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $14.41 billion. The net reserves held by banks amounted to $5.83 billion.
The current account deficit remains one of the key challenges for the stability of the rupee, as after moderating in the previous three months, it rose to $1.4 billion in May, on the back of lower exports and remittances partly due to the Eid holiday.
The trade deficit rose to $4.8 billion in June, more than $1.7 billion higher than its February low. While non-energy imports have continued to moderate in the last three months on the back of curtailment measures by the government and the SBP.
The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs33.99 or 16.59 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs238.84.
At the open market, the buying and selling of the dollar was recorded at Rs241 and Rs246 at 4:00pm PST.
