KARACHI: The Pakistani rupee’s downward momentum continued against the dollar on Tuesday due to dwindling foreign exchange reserves, besides deteriorating macroeconomics, dealers said.
The exchange rate witnessed a loss of 82 paisas against the dollar to reach Rs219.71 from the previous day’s closing of Rs218.89 in the interbank foreign exchange market.
Currency experts said that the fifth consecutive loss came in the value of the rupee amid a reduction in the foreign exchange reserves and reduced inflows of the foreign currency along with multiple debt obligations approaching.
The investors’ sentiments seem to have cooled down regarding the Dar effect after the country’s macroeconomics deteriorated while the finance minister has so far failed to secure any major funding and investment agreements from multilateral institutions, they added.
The foreign exchange reserves of the country have declined to an alarmingly low level amid interest and import payments while the government is likely to move for imports of essential items amid destruction caused by the floods.
The foreign exchange reserves held by the State Bank of Pakistan (SBP) were down $303 million to clock-in at $7.59 billion during the week ended October 7, compared with $7.89 billion on September 30.
The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13.24 billion. The net reserves held by banks amounted to $5.64 billion.
According to the central bank, the drop came due to external debt repayments, which included repayment of a commercial loan and interest payment on Eurobonds.
Finance Minister Ishaq Dar on September 16, urged the International Monetary Fund (IMF) and multilateral donors to provide greater policy support.
He asked the IMF to tailor its response to the situation in Pakistan and similar countries by taking into consideration the serious economic, social and political challenges that they face amid climate-induced calamities, a statement said.
The workers’ remittances by overseas Pakistanis slowed down to a four-month low at $2.44 billion in September 2022. The receipts contracted 10.5 per cent in September, compared with the inflows of $2.72 billion in the previous month.
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.
The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs14.86 or 7.25 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs219.71.
At the open market, the buying and selling of the dollar was recorded at Rs224 and Rs226 at 4:45pm PST.
