KARACHI: The Pakistani rupee continued its winning streak against the dollar on Monday on the back of market optimism regarding the new finance minister’s measures to stabilise the economy, dealers said.
The exchange rate witnessed a gain of Rs1.16 to reach Rs227.29 against the dollar from the Friday’s closing of Rs228.45 at the interbank exchange market.
Analysts said that Finance Minister Ishaq Dar’s arrival and his subsequent comments on the rupee’s undervaluation has boosted investors’ confidence.
The economic policy will also likely to remain stable after Dar was appointed finance minister which has changed the market sentiment regarding the stability in the value of the local unit, they added.
Exporters began selling the greenback after Dar said that strengthening the rupee was his main objective. Additionally, the finance minister’s warning to speculators and the exporters’ healthy supplies of the dollar helped support the rupee.
However, the current rally of the rupee is likely to be short-lived as the macroeconomics of the country are deteriorating where the foreign exchange reserves of the country witnessed a significant decline.
The foreign exchange reserves of the State Bank of Pakistan (SBP) fell $341 million, clocking in at an alarming level of $8 billion during the week ended September 23, compared with $8.34 billion on September 16.
The total liquid foreign exchange reserves held by the country stood at $13.76 billion. The net foreign reserves held by commercial banks amounted to $5.76 billion.
An ease in the current account deficit was 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 Rs22.44 or 10.9 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs227.29.
At the open market, the buying and selling of the dollar was recorded at Rs228.5 and Rs230.5 at 3:45pm PST.
