Rupee down 94 paisas against dollar after Eid holidays

KARACHI: The Pakistani rupee declined 94 paisas against the dollar on Friday as the market opened after observing four holidays on the occasion of Eid-ul-Fitr.

The local unit fell 94 paisas to close at Rs186.63 to the dollar from Saturday’s closing of Rs185.69 in the interbank foreign exchange market.

The dealers said that the local currency took a tumble as the market opened after Eid holidays where the market witnessed demand for the dollar for imports payments coupled with the rising commodity prices in the international markets.

The country has faced significant pressure on its foreign-exchange reserves in recent months, amid elevated global commodity prices and highly fluctuating global oil prices.

Pakistan is a net importer of petroleum products and any change in the prices of petroleum products directly affects the country’s import bill.

The international oil prices also witnessed a significant rise as the European Union lays out ban oil imports from Russia amid the Russia-Ukraine war. The benchmark Brent oil hovered around $112/barrel on Thursday

The depleting forex reserves continue to remain the biggest challenges to the stability of the rupee. The country’s foreign exchange reserves fell by $377 million in the week ended on April 23.

The total liquid foreign reserves held by the country stood at $16.668 billion, compared with $17.045 billion in the previous month, the State Bank of Pakistan (SBP) said.

The reserves held by the State Bank of Pakistan declined by $328 million to $10.558 billion on external debt and other payments, the central bank added.

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 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 Rs28.15 or 18.46 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs186.63.

At the open market, the buying and selling of the dollar was recorded at Rs185.5 and Rs186.5 at 4:30pm PST.