Rupee’s 13-day successful run ends

KARACHI: The Pakistani rupee’s winning streak ended against the dollar on Wednesday on the back of a decline in workers’ remittances besides increasing demand for the greenback, dealers said.

The exchange rate witnessed a loss of 9 paisas against the dollar to reach Rs217.88 from the previous day’s closing of Rs217.79 in the interbank foreign exchange market.

Currency experts said that the local unit witnessed a decline after gaining for 13 consecutive sessions after a drop in the inflows changed sentiment in the market.

The market witnessed an increasing demand for the dollar by the importers as they opted to buy the greenback over a likely increase in its value, they added.

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 rupee’s 13-day flight was sentiment-driven as the investors’ confidence got a boost after Ishaq Dar took charge of the finance ministry. However, in the absence of economic fundamentals of the country, the local unit’s flight was likely to be short-lived, the experts said.

On the inflows front, the Asian Development Bank (ADB) on September 5, announced it would provide aid of around $2.5 billion for relief operations in the wake of devastating floods that have caused catastrophic damage in Pakistan.

The country is also expected to receive around $1 billion from the United Nations (UN) and $1 billion from the World Bank during a period between October and December.

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.

On the flip side, the foreign exchange reserves of the country have been on a constant decline due to external debt repayment.

The foreign currency reserves held by the State Bank of Pakistan (SBP) fell by $106 million to reach $7.89 billion during the week ended September 30, compared with $8 billion on September 23.

The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13.58 billion. The Net reserves held by banks amounted to $5.68 billion.

The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs13.03 or 6.36 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs217.88.

At the open market, the buying and selling of the dollar was recorded at Rs218.3 and Rs220.5 at 4:30pm PST.