Rupee back to downward trend on economic uncertainty

Rupee back to downward trend on economic uncertainty

Rupee back to downward trend on economic uncertainty
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KARACHI: The Pakistani rupee’s three day winning streak ended on Thursday as it declined 42 paisas against the dollar amid gloomy economic situation in the country, dealers said.

The local currency shed 42 paisas to close at Rs185.87 to the dollar from the previous day’s closing of Rs185.45 in the interbank foreign exchange market.

Although the government and the International Monetary Fund (IMF) have agreed to revive and extend the Extended Fund Facility (EFF) programme, the bleak macro-economic figures are a big challenge to the stability in the value of the local unit, the dealers added.

Pakistan and the IMF agreed to extend the stalled bailout programme by up to one year and increase the loan size to $8 billion, to provide the much-needed stability to the markets and the rupee.

The IMF mission will visit Pakistan in May to resume discussions over policies for completing the seventh EFF review.

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The local currency hit the historic low of Rs188.18 on April 7, as the country faced the worst political crisis resulting in uncertain economic conditions.

The depleting forex reserves, the ever-widening current account deficit have been two of the major factors in denting the local currency’s stability against the greenback.

The country’s foreign exchange reserves clocked-in at $17.045 billion by the week ended April 16, 2022. The foreign exchange reserves of the country were at $17.028 billion a week ago.

The official foreign exchange reserves of the State Bank also improved by $36 million to $10.886 billion by the week ended April 16, 2022 as compared with $10.85 billion a week ago.

The foreign exchange held by commercial banks, however, fell by $19 million to $6.157 billion by the week ended April 16, 2022 as compared with $6.178 billion a week ago.

The ballooning current account deficit is another reason for escalation in the dollar value. Pakistan’s current account deficit ballooned to $12 billion during the first eight months (July – February) 2021/22 against a surplus of $994 million in the corresponding months of the last fiscal year.

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The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs28.33 or 17.98 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs185.87.

At the open market, the buying and selling of the dollar was recorded at Rs185.5 and Rs186.5 at 3:30pm PST.

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