Import restrictions may help rupee stabilise

KARACHI: Import restrictions introduced through the Finance Supplementary Bill is expected to help the rupee remain stable next week. However, a surge in the international oil prices may prove otherwise.

The National Assembly on January 13, 2022 approved the Finance (Supplementary) Bill, 2021. Through the legislation, the government withdrew exemptions and concessions worth Rs343 billion. These concessions were available on various non-essential and luxury items.

The withdrawal of exemptions will help the country reduce the import bill and subsequently ease the burden on the exchange rate.

The import bill maintained a growth of 69 per cent to $40.58 billion during the first half (July-December) of the fiscal year 2021/22, compared with $24.45 billion in the same half of the last fiscal year.

Further, the rupee may also remain stable on the back of measures introduced by the State Bank of Pakistan (SBP) to ensure the realisation of export receipts within 120 days.

The SBP on January 5, 2022 directed the exporters to realise their export receipts within 120 days from the date of shipment instead of 150 days.

Following the restrictions imposed by the SBP related to export receipts, the rupee recovered 60 paisas, or 0.34 per cent, against the dollar during the week (January 10 to January 14).

However, the rising international oil prices still haunt the rupee stability in the coming days. The oil prices surged to above $85/barrel in the international markets.

The oil import bill of the country sharply increased 112 per cent to $8.38 billion during the first five months (July-November) of the current fiscal year, compared with $3.94 billion in the corresponding months of the last fiscal year.

Further, the fall in the foreign exchange reserves will also put pressure on the exchange rates during the next week. The foreign exchange reserves of the country fell $118 million to $23.901 billion by the week ended January 7, 2022, compared with $24.019 billion a week ago. The official foreign exchange reserves of the SBP declined $88 million to $17.598 billion by the week under review, compared with $17.686 billion a week ago.

However, the foreign exchange reserves will improve with the inflows from the International Monetary Fund (IMF), as the government has met one of the conditions of passing the Finance Supplementary Bill from the National Assembly.

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