KARACHI: The rupee continued its gaining streak against the dollar on Wednesday, amid improved sentiments over the appointment of Ishaq Dar as the new finance minister, dealers said.
The exchange rate witnessed a gain of Rs1.79 to reach Rs232.12 against the dollar from the previous day’s closing of Rs233.91 at the interbank exchange market.
Analysts said the fourth consecutive gain of the rupee is due to the investors’ optimism regarding the arrival of Dar, who is known to artificially keep the rupee overvalued against the dollar.
However, the recent flight of the local unit is expected to be short-lived on the back of strengthening dollar against major currencies after the US Federal Reserve hiked the interest rate to fight inflation, they added.
Additionally, the foreign exchange reserves of the country are on a continuous decline while the government is expected to import essential items which will result in the widening of the current account deficit.
The foreign exchange reserves of the country have 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 government 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.
An ease in the current account deficit was also witnessed during the current fiscal year. 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 local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs27.27 or 13.31 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs232.12.
At the open market, the buying and selling of the dollar was recorded at Rs230 and Rs233 at 3:30pm PST.
