Rupee declines 98 paisas against the dollar

KARACHI: The Pakistani rupee declined 98 paisas to reach Rs213.90 against the dollar on Wednesday ending the 11-day winning streak of the local currency.

The local unit shed 98 paisas to close at Rs214.88 to the dollar from Tuesday’s closing of Rs213.90 in the interbank foreign exchange market.

The local currency witnessed correction in the market after it gained for 11 consecutive sessions on the back of likely disbursement of $1.17 billion from the International Monetary Fund (IMF) under the Extended Fund Facility (EFF) programme and financial assistance from friendly countries, the analysts said.

The depreciation in the value of rupee came amid the news that Pakistan has sent the letter of intent (LoI) back to the IMF following the fulfilment of pre-requisite conditions, paving the way for the executive board’s meeting.

With the successful completion of the IMF programme, the country is likely to secure further loan agreements with other multilateral institutions and friendly countries to boost its foreign exchange reserves.

Additionally, Saudi Arabia is also reported to renew its $3 billion deposit to help the cash-starved country in meeting its financial needs.

The country’s current account deficit has also narrowed during July on the back of lower import bill. The trade deficit came in at $2.64 billion in July, down 47 per cent or $2.32 billion on a month-on-month basis.

However, the foreign exchange reserves of the country are on a constant decline amid debt servicing and debt payments. The foreign currency reserves held by the State Bank of Pakistan (SBP) recorded a decline of $555 million to clock-in at $7.83 billion during the week ended on August 5, compared with $8.38 billion on July 29.

The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13.56 billion. The net reserves held by banks amounted to $5.73 billion.

The country’s current account deficit rose 531 per cent to over $17 billion during the fiscal year 2022 due to massive increase in goods import bill. Overall, the current account deficit was $17.4 billion during the fiscal year 2022, compared with $2.8 billion in the fiscal year 2021, depicting an increase of $14.6 billion.

The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs10.3 or 4.89 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs214.88.

At the open market, the buying and selling of the dollar was recorded at Rs212.15 and Rs215 at 3:30pm PST.