SBP measures likely to support rupee next week

KARACHI: The rupee is expected to remain stable next week on the back of the measures introduced by the central bank to ensure realisation of export receipts within 120 days.

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

However, despite registering gains for the last three days, the international oil price fluctuation is still expected to haunt the rupee stability in the coming days. The benchmark Brent crude oil was trading at $86.85/barrel in the international markets on Friday.

In the outgoing week, the local currency registered a decline of 18 paisas against the dollar during the outgoing week to end at Rs176.24, compared with Rs176.06 during the preceding week.

The surging global crude oil prices offset the measures taken by the State Bank of Pakistan (SBP) to give support to the local currency.

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 was expected to help the country reduce the import bill and subsequently ease the burden on the exchange rate. But a hike in the international oil prices pushed the local currency on a downward trajectory.

Furthermore, the liquid foreign exchange reserves of the country plummeted $551 million to $23.35 billion by the week ended January 14, 2022, with the SBP’s foreign exchange reserves recorded a decline of $562 million to $17.036 billion by the week ended January 14, 2022, compared with $17.598 billion a week ago.

The decline in the forex reserves came as the country made payments in the import bill and external debts. 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.

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.

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