KARACHI: The rupee ended its 15-day losing streak against the dollar on Friday, amid an ease in the current account deficit during the ongoing fiscal year, dealers said.
The exchange rate witnessed a gain of 6 paisas to reach Rs239.65 against the dollar from the previous days’ closing of Rs239.71 at the interbank exchange market.
The marginal increase in the value of the local currency came after it witnessed a continuous decline for 15 consecutive sessions on the back of deteriorating macroeconomics of the country.
However, surging dollar value in the international market, declining foreign exchange reserves and a likely increase in the current account deficit in the coming months remain major challenges for the local unit to maintain its gaining momentum.
On the global stage, the dollar continued its flight against major currencies after the US Federal Reserve’s announcement in which it raised the key US interest rate again, which took the policy rate to 3.0-3.25 per cent.
Pakistan’s current account deficit shrank 19 per cent during the first two months of the fiscal year 2023 due to a lower import bill and increase in exports.
Cumulatively, the country recorded a current account deficit amounting to $1.92 billion in the first two months of ongoing fiscal year, compared with $2.37 billion in the same period of last fiscal year, depicting a decline of $456 million, a report by the State Bank of Pakistan (SBP) showed.
The decline in the current account deficit is due to an 11 per cent surge in exports and around 2 per cent contraction in the import bill, the central bank said.
The government also secured some economic support from Saudi Arabia, to provide the required stability to the exchange rate.
The Saudi Fund for Development (SFD) has confirmed a rollover of a $3 billion deposit maturing on December 5, for one year. The deposit is placed with the SBP and is part of its foreign exchange reserves.
The country’s current account and trade deficit are expected to widen in the future as the government is moving to import essential food items. The industrial activities have also been badly disrupted which will massively impact the exports of the country.
Likewise, the foreign exchange reserves of the country have also recorded a decline on the back of less inflows and higher imports.
The foreign currency reserves held by the State Bank of Pakistan (SBP) recorded a decline of $278 million to reach $8.34 billion during the week ended September 16, compared with $8.62 billion on September 9.
The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $14.06 billion. The net reserves held by banks amounted to $5.72 billion.
The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs34.8 or 16.98 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs239.65.
At the open market, the buying and selling of the dollar was recorded at Rs241.5 and Rs244 at 4:45pm PST.
[embedpost slug=”rupee-declines-for-14th-consecutive-session-against-dollar/”]
