KARACHI: The Pakistani rupee extended its losses against the dollar on Thursday after the greenback rallied against major currencies, besides declining foreign exchange reserves of the country, dealers said.
The exchange rate shed 52 paisas against the dollar to reach Rs221.95 from the previous day’s closing of Rs221.43 in the interbank foreign exchange market.
Currency experts said that the rupee remained under pressure as the greenback rallied against major currencies after the US Federal Reserve raised its benchmark funds rate by 75 basis points to 3.75 per cent to 4 per cent.
The dollar rose on Thursday, buoyed by a sharp rise in the Treasury yields, after the US Fed signaled US interest rates will likely peak above where investors currently expect, while the pound fell ahead of a Bank of England policy meeting.
The dollar initially fell on hints in the Fed’s statement of smaller hikes ahead, but rebounded after Chair Jerome Powell said that the battle against inflation will require borrowing costs to rise further.
The global oil prices fell on Thursday as the dollar firmed on the Federal Reserve’s hawkish stance, but concerns over looming supply risks kept a floor under prices.
On the local economic front, the country’s trade deficit narrowed down 26.59 per cent to $11.469 billion during the first four months of the current fiscal year, compared with $15.624 billion during the same period of last year.
The foreign exchange reserves are on a constant decline as the official foreign exchange reserves of the SBP fell $157 million to $7.44 billion by the week ended October 21, compared with $7.59 billion a week ago.
The central bank attributed the decline to external debt repayments. The SBP said it had received $1.5 billion from the Asian Development Bank (ADB) in value on October 26. These proceeds will be reflected in the SBP reserves for the week ending October 28.
The total foreign exchange reserves of the country fell $89 million to $13.16 billion by the week ended October 21, compared with $13.25 billion a week ago.
The foreign exchange held by the commercial banks witnessed an increase of $68 million to $5.72 billion by the week ended October 21, as against $5.654 billion on October 14.
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 local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs17.10 or 8.34 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs221.94.
At the open market, the buying and selling of the dollar was recorded at Rs225.5 and Rs227.75 at 3:30pm PST.
