Rupee plunges to Rs200.06 against dollar

Rupee plunges to Rs200.06 against dollar

Rupee plunges to Rs200.06 against dollar
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KARACHI: The rupee plunged by Rs2.14 against the dollar on Monday, owing to a steep fall in the foreign exchange reserves and the rumours of freezing foreign currency accounts, dealers said.

The exchange rate ended at Rs200.06 against the greenback from last Friday’s closing of Rs 197.92 in the foreign exchange market.

The dealers said the rupee was under pressure due to a sharp decline in the foreign exchange reserves and panic in the market, owing to the reports of the government’s action to freeze the foreign currency accounts.

The rupee hit an all-time low of Rs202.01 against the dollar on May 26, 2022. However the same day, the government decided to increase the petroleum prices to pave the way for the resumption of the IMF loan programme.

Following this decision, the rupee made a significant recovery to Rs197.59 on June 2, 2022.

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The foreign exchange reserves of the State Bank of Pakistan (SBP) recorded a massive decline as per the data issued on June 2, 2022. The local currency again came under pressure and started losing value.

The foreign exchange reserves of the State Bank of Pakistan (SBP) fell to a two years low of $9.72 billion by the week ended May 27, 2022. The SBP’s foreign exchange reserves were at $10.089 billion a week ago, May 20, 2022. The central bank said that its forex reserves decreased $366 million to $9.723 billion due to the external debt repayment. The SBP’s foreign exchange reserves were at $9.96 billion on June 19, 2020.

The rupee remained under pressure against the greenback during the current fiscal year. The State Bank of Pakistan has taken various measures to support the balance of payments position and the local currency. However, the measures ended in a failure to help the rupee recover losses.

On May 23, 2022, the central bank announced a sharp increase in the policy rate by 150 basis points to 13.75 per cent from 12.25 per cent.

Recently, the government announced a complete ban on imports to support the balance of payments position and help the rupee stabilise. However, these measures appeared insufficient, as the exchange rate yet again deteriorated massively.

Pakistan’s import bill massively increased to $72.18 billion during the first 11 months (July-May) 2021/22, compared with $50.03 billion in the same period of the last fiscal year, showing an increase of 44.28 per cent.

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