Rupee upsurge continues, reaches Rs218.88/dollar

KARACHI: The Pakistani rupee gained Rs3.03 on Thursday to reach Rs218.88 against the dollar as the investors and traders rejoiced at the development regarding the likely inflows besides a reduced current account deficit.

The local unit gained Rs3.03 to close at Rs218.88 to the dollar from Wednesday’s closing of Rs221.91 in the interbank foreign exchange market.

The rupee has recorded gains in the interbank market for eight consecutive sessions after the Army Chief of Pakistan requested the US officials for their cooperation in the early resumption of the International Monetary Fund (IMF) programme.

Analysts said that the news inflows regarding a likely disbursement from the IMF and a reduction in the current account deficit enhanced the investors’ participation in the market. 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.

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Additionally, the international oil prices witnessed a decline while the imports had been reduced due to the government’s measures, all of which had affected the exchange rate positively, they added.

The resumption of the IMF programme is also likely to pave the way for Pakistan to attract funds from other multilateral lender institutions and friendly countries which provided a boost to the investors’ confidence.

The local currency has been on an upward stream as exporters who had previously stopped depositing their payments, had started selling dollars while importers were waiting for the exchange rate to stabilise, due to which the market witnessed more sellers than buyers of the dollars.

However, the narrowing foreign exchange reserves of the country pose a constant threat to rupee stability. The foreign currency reserves held by the State Bank of Pakistan (SBP) recorded a decline of $190 million to clock-in at $8.38 billion during the week ended on July 29, compared with $8.57 billion on July 22.

The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $14.20 billion. The net reserves held by banks amounted to $5.82 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 Rs14.03 or 6.84 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs218.88.

At the open market, the buying and selling of the dollar was recorded at Rs215 and Rs220 at 4:00pm PST.