Rupee closes flat against dollar in interbank market

• Pakistani rupee held steady against the dollar for second consecutive session.
• Exchange rate remained unchanged at Rs223.95 in the interbank foreign exchange market.
• Foreign exchange reserves held by the State Bank of Pakistan fell $134 million to $7.82 billion during the week ended November 18.

KARACHI: The Pakistani rupee remained firmed against the dollar for the second consecutive session on Wednesday owing to inflows from the Asian Infrastructure Investment Bank (AIIB) besides reduced demand for the dollar, dealers said.

The exchange rate remained unchanged at Rs223.95 in the interbank foreign exchange market.

Currency experts said that the local unit remained stable as the government received $500 million from Asian Infrastructure Investment Bank (AIIB) on November 29.

They were of the view that the local unit maintained its ground due to reduced demand for the greenback as the recent hike in the key policy rate played a significant role in discouraging the manufacturing sector to import raw material.

However, any further delay in the negotiation between Pakistan and the International Monetary Fund (IMF) for the ninth review under the Extended Fund Facility (EFF) loan programme may increase pressure on the local unit as the foreign exchange reserves are on a constant decline.

The foreign exchange reserves held by the State Bank of Pakistan fell $134 million to reach $7.82 billion during the week ended November 18, compared with $7.95 billion on November 11.

According to the central bank, the decrease in reserves came due to external debt repayment.

The overall liquid foreign currency reserves held by the country, including the net reserves held by banks other than the SBP, stood at $13.64 billion, while the net reserves held by banks amounted to $5.81 billion.

The net foreign direct investment (FDI) in Pakistan slumped 62 per cent to $95 million in October 2022, compared with $247.3 million in the same month last year. However, the net FDI was up 13 per cent, compared with $84 million recorded in September 2022.

During the first four months of fiscal year 2023, the net FDI dropped 52 per cent year-on-year to $348 million, compared with $726 million during the same period of last fiscal year.

The workers remittances have also declined 15.7 per cent to reach $2.21 billion in October, compared with $2.62 billion in the same month of the last year.

On a monthly basis, the remittances witnessed a decline of 9 per cent, compared with $2.43 billion received during September.

The textile exports declined 15.2 per cent to reach $1.35 billion in October, compared with $1.6 billion in the corresponding month of the last year.

On a monthly basis, the exports declined 11.1 per cent with a major decline in components including cotton cloth, knitwear, bedwear, towels, and readymade garments.

The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs19.10 or 9.32 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs223.95.

At the open market, the buying and selling of the dollar was recorded at Rs 229.5 and Rs231.5 at 5:00pm PST.

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