KARACHI: The rupee recorded a loss for the fifth consecutive session against the dollar on Thursday amid a surge in the dollar value besides the weak Pakistani economy and the impact of floods.
The exchange rate witnessed a loss of Rs2 to reach Rs225.42 against the dollar from the previous day’s closing of Rs223.42. The local currency fell to the historic low of Rs239.94 against the dollar on July 28, 2022.
Currency experts said that the local currency is back on a downward stream after witnessing a recovery for a short period on the back of International Monetary Fund (IMF) programme completion.
The current account deficit will likely extend on the back of various crop destruction which will hit the export of the country, along with a surging dollar, which has gained value against major currencies, they added.
The government is likely to revise gross domestic product (GDP) targets, due to the devastating floods in the country which will slow down production in various sectors, against the International Monetary Fund’s (IMF) forecast of 3.5 per cent.
Pakistan’s trade deficit also widened in August, after witnessing an ease in the previous month, while the analysts predict a further uptick in imports in the coming months.
According to the Pakistan Bureau of Statistics (PBS) data, the trade deficit clocked-in at $3.53 billion in August, compared with $2.73 billion, showing an increase of 28.89 per cent.
During the month, the imports recorded an increase of 20.84 per cent to $6.03 billion, compared with $4.99 billion during the previous month.
The Consumer Price Index (CPI) increased to record 27.26 per cent in August attributed to hiked commodity prices.
The shrinking foreign exchange reserves also remain a key challenge in stabilising the value of the rupee as it witnessed another decline during the outgoing week.
The foreign exchange reserves held by the central bank recorded a decline of $113 million to reach $7.69 billion during the week ended August 26, compared with $7.80 billion on August 19.
The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13.40 billion. The net reserves held by banks amounted to $5.70 billion.
The country’s current account deficit rose 531 per cent to over $17 billion during the fiscal year 2022 due to massive increase in goods import bill. Overall, the current account deficit was $17.4 billion during the fiscal year 2022, compared with $2.8 billion in the fiscal year 2021, depicting an increase of $14.6 billion.
The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs20.57 or 10.04 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs225.42.
At the open market, the buying and selling of the dollar was recorded at Rs232.1 and Rs234.6 at 3:30pm PST.
