Rupee gains 70 paisas against dollar

KARACHI: The rupee gained 70 paisas against the dollar on Monday after Pakistan’s talks with the International Monetary Fund (IMF) for the revival of the Extended Fund Facility (EFF) showed progress, dealers said.

The local unit closed at Rs186.05 against the greenback from Saturday’s closing of Rs186.75 in the interbank foreign exchange market.

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

The rupee has been on the downward trend during the previous week as the economic and political situation in the country remained uncertain amid reducing forex reserves and rising import bill which resultantly widened the current account deficit of the country.

The local currency was provided with some short-lived support during the previous week on account of an unprecedented increase in the key policy rate by the State Bank of Pakistan (SBP) coupled with other measures to curb the import bill of the country.

The central bank also imposed 100 per cent cash margins on 177 items in a bid to curb their imports, which helped easing pressure on the rupee and reducing trade and the current account deficits.

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 country’s foreign exchange reserves clocked-in at $17.045 billion by the week ended April 16, 2022, State Bank of Pakistan (SBP). 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.

The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs28.51 or 18.09 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs186.05.

At the open market, the buying and selling of the dollar was recorded at Rs185.25 and Rs187 at 3:15pm PST.