Rupee declines against dollar in interbank

Rupee declines against dollar in interbank

Rupee declines against dollar in interbank
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KARACHI: The Pakistani rupee fell 33 paisas to reach Rs197.92 on Friday as the foreign exchange reserves of the country declined to a record low besides Moody’s downgrading Pakistan’s outlook to negative from stable.

The local unit declined 33 paisas to close at Rs197.92 to the dollar from Thursday’s closing of Rs197.59 in the interbank foreign exchange market. The rupee recorded the historic low of Rs202.01 on May 26, 2022.

The rupee’s five day winning streak against the dollar ended as the forex reserves of the country reduced to a new low denting investors’ and traders’ confidence, the dealers said.

There will be speculation and panic buying in the market unless the government reaches a deal with the International Monetary Fund (IMF) for the resumption of the multibillion dollar Extended Fund Facility (EFF) programme to stabilise the forex reserves of the country, they added.

The foreign currency reserves held by the State Bank of Pakistan’s (SBP) were down $366 million to reach $9.72 billion during the week ended May 20, compared with $10.08 billion on May 20.

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The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $15.77 billion, while the net reserves held by banks amounted to $6.04 billion.

In another instance on Thursday, global rating agency Moody’s downgraded Pakistan’s outlook from stable to negative, citing “heightened external vulnerability” and uncertainty around securing external financing to meet the country’s needs.

Moody’s in its statement said that while it was hopeful Pakistan would complete its IMF review and attract further external financing, if Pakistan failed to do so, then it could face a balance of payments crisis.

The widening current account deficit is another threat to the stability of the local unit. Pakistan’s trade deficit showed a sharp growth to $3.64 billion in March 2022, registering an increase of 12 per cent over the same month of the last fiscal.

The total trade deficit escalated to $35.52 billion in the first nine months (July-March) period of the current fiscal year against $20.8 billion in the same period last fiscal year.

The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs40.38 or 25.63 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs197.92.

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At the open market, the buying and selling of the dollar was recorded at Rs196.4 and Rs198.5 at 4:45pm PST.

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