KARACHI: The Pakistani rupee’s flight continued against the dollar on Friday, amid expectations of inflows from foreign financial institutions, besides a reduction in trade deficit, dealers said.
The exchange rate witnessed a gain of Rs2.02 against the dollar to reach Rs219.92, from the previous day’s closing of Rs221.94 in the interbank foreign exchange market.
Currency experts said that the market sentiments improved following the announcement by the Asian Development Bank (ADB) to lend support to the local economy.
The ADB on September 5, announced it would provide aid of around $2.5 billion for relief operations in the wake of devastating floods that have caused catastrophic damage in Pakistan, they added.
The market witnessed a continuous supply of the greenback where exporters and traders opted to sell the greenback after Finance Minister Ishaq Dar said that the government is trying to bring the dollar below the Rs200 mark.
The trade deficit of Pakistan recorded a decline of 21.42 per cent to clock-in at $9.2 billion in the first quarter of the fiscal year 2023, compared with that of $11.7 billion recorded during the same period of fiscal year 2022.
The total imports during the first quarter stood at $16.3 billion, compared with $18.71 billion recorded during the same period of last fiscal year. The exports rose to $7.1 billion, from $6.99 billion in the first quarter of last year.
On the flip side, the foreign exchange reserves of the country have been on a constant decline due to external debt repayment.
The foreign currency reserves held by the State Bank of Pakistan (SBP) fell by $106 million to reach $7.89 billion during the week ended September 30, compared with $8 billion on September 23.
The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13.58 billion. The Net reserves held by banks amounted to $5.68 billion.
Moody’s Investors Service on Thursday also downgraded Pakistan’s credit rating to ‘Caa1’ from ‘B3’ and maintained the outlook at negative.
In the wake of the disastrous floods that have struck the nation since June 2022, the decision to lower the ratings to ‘Caa1’ was motivated by increased government liquidity, external vulnerability risks, and higher debt sustainability risks.
The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs15.07 or 7.35 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs219.92.
At the open market, the buying and selling of the dollar was recorded at Rs221 and Rs223 at 4:45pm PST.
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