KARACHI: The Pakistani rupee extended gains against the dollar on Friday amid improved investors’ sentiments as Ishaq Dar took charge of the finance ministry, dealers said.
The exchange rate witnessed a gain of Rs1.18 to reach Rs228.45 against the dollar from the previous day’s closing of Rs229.63 at the interbank exchange market.
Analysts said the rupee rally against the dollar is driven by sentiment, while the exporters are selling dollars in the market over the likely increase in the value of the rupee in the near term.
The speculations regarding the local unit seem decreased following the finance minister’s announcement that no one would be allowed to manipulate the money market.
On the flip side, the current rally of the rupee is likely to be short-lived as the macroeconomics of the country are deteriorating where the foreign exchange reserves of the country witnessed a significant decline.
An expansion in the current account deficit is also likely on the back of the government’s import of essential items to meet local demand.
The foreign exchange reserves of the State Bank of Pakistan (SBP) fell $341 million, clocking in at an alarming level of $8 billion during the week ended September 23, compared with $8.34 billion on September 16.
The total liquid foreign exchange reserves held by the country stood at $13.76 billion. The net foreign reserves held by commercial banks amounted to $5.76 billion.
An ease in the current account deficit was witnessed during the current fiscal year. Pakistan’s current account deficit shrank 19 per cent during the first two months of the fiscal year 2023 due to a lower import bill and increase in exports.
Cumulatively, the country recorded a current account deficit amounting to $1.92 billion in the first two months of ongoing fiscal year, compared with $2.37 billion in the same period of last fiscal year, depicting a decline of $456 million, a report by the State Bank of Pakistan (SBP) showed.
The decline in the current account deficit is due to an 11 per cent surge in exports and around 2 per cent contraction in the import bill, the central bank said.
The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs23.6 or 11.52 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs228.45.
At the open market, the buying and selling of the dollar was recorded at Rs225 and Rs227.5 at 5:00pm PST.
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