KARACHI: The Pakistani rupee fell against the dollar on Thursday due to increasing political noise besides the absence of economic fundamentals, dealers said.
The exchange rate witnessed a loss of 82 paisas against the dollar to reach Rs221.50 from the previous day’s closing of Rs220.68 in the interbank foreign exchange market.
Currency experts said that the rupee remained under pressure for the second consecutive session amid political uncertainty after Pakistan Tehreek-e-Insaf Chairman Imran Khan announced to start a long march from Lahore to Islamabad, which caused negative sentiment among investors.
The local unit declined despite the Asian Development Bank (ADB) releasing $1.5 billion for Pakistan to support the economy and rehabilitate the affected people in the wake of recent floods.
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 dollar rallied against major currencies on Thursday, after earlier falling to a one-month low in choppy trading ahead of an expected rate hike from the European Central Bank (ECB).
The greenback has slid in recent days as investors have cheered signs that the US Federal Reserve is considering slowing down its aggressive rate hikes in December. Yet the dollar reversed course on Thursday in what analysts said was a natural bounce after a steep decline.
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 Rs16.65 or 8.12 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs221.50.
At the open market, the buying and selling of the dollar was recorded at Rs223.2 and Rs225.5 at 3:45pm PST.
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