KARACHI: The Pakistani rupee continued to recover for the third consecutive session against the dollar on Tuesday, owing to improved investors’ sentiments over the likely inflows and Pakistan’s exclusion from the Financial Action Task Force’s (FATF) grey list, dealers said.
The exchange rate witnessed a gain of 68 paisas against the dollar to reach Rs219.73 from the previous day’s closing of Rs220.41 in the interbank foreign exchange market.
Currency experts said that the rupee continued to strengthen after Pakistan was excluded from the FATF grey list while the Asian Development Bank (ADB) has also approved $1.5 billion in financing to help Pakistan amid devastating floods and global supply chain disruptions.
Prime Minister Shehbaz Sharif, Finance Minister Ishaq Dar, and other government officials are in Saudi Arabia to discuss the rollover of $3 billion in deposits and additional financial support with the Saudi Arabian authorities, they added.
Pakistan has also requested China to rollover its $6.3 billion debt that is maturing in the next eight months. The finance minister is expected to head to China to request for relief from Chinese authorities.
On the flip side, Fitch Ratings downgraded Pakistan’s long-term foreign-currency Issuer Default Rating (IDR) to ‘CCC+’ from ‘B-‘. The demotion came as a surprise since Fitch typically does not assign outlooks to sovereigns with a rating of ‘CCC+’ or below.
The foreign exchange reserves held by the State Bank of Pakistan (SBP) remained almost flat. The foreign currency reserves held by the central bank were up $0.3 million to reach $7.59 billion during the week ended on October 14, compared with $7.59 billion on October 7.
The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13.25 billion. The net reserves held by banks amounted to $5.65 billion.
Pakistan’s current account deficit shrank more than 37 per cent on a year-on-year basis during the first quarter of the fiscal year 2023.
During the first three months of the fiscal year 2023, the current account deficit of Pakistan amounted to $2.2 billion, compared with $3.52 billion recorded during the same period last year, according to a monthly report published by the central bank.
The trade deficit in services narrowed by 26.22 per cent on a year-on-year basis to clock-in at $647 million in the first quarter of the fiscal year 2022/23, from a deficit of $877 million recorded in the same period of last fiscal year.
Similarly, the deficit has shrunk by 24 per cent on a monthly basis and 14.85 per cent on a yearly basis to stand at $172 million in September, compared with $227 million in August and $202 million in the same month of last fiscal year.
The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs14.88 or 7.26 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs219.73.
At the open market, the buying and selling of the dollar was recorded at Rs220.8 and Rs223 at 4:15pm PST.
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