Rupee free fall continues in interbank market

KARACHI: The rupee continued to lose ground against the dollar on Tuesday, as the government failed to secure loan and investment agreements to provide support to the local unit.

The exchange rate witnessed a loss of Rs2.1 to reach Rs231.92 against the dollar from the previous days’ closing of Rs229.82 at the interbank exchange market.

The analysts said that the local unit came under renewed pressure as Asian Development Bank (ADB), World Bank (WB) and friendly countries are still reluctant to give loans and invest in Pakistan.

The latest decline in the local currency came amid Finance Minister Miftah Ismail’s statement that friendly countries are not ready to provide financial assistance to Pakistan because it has an imbalanced economy, they added.

On the global stage, the greenback is strengthening against major currencies, while the local conditions of the country worsened with high inflation readings and flood related agriculture losses of more than $10 billion.

According to the Pakistan Bureau of Statistics (PBS) data, the trade deficit clocked-in at $3.53 billion in August, compared with $2.73 billion, showing an increase of 28.89 per cent.

During the month, the imports recorded an increase of 20.84 per cent to $6.03 billion, compared with $4.99 billion during the previous month. The analysts expect an uptick in the current account deficit as the country is likely to move for the import of essential food items amid the catastrophic floods which have wreaked havoc on the agriculture of the country.

However, the foreign exchange reserves of the country got a boost after the State Bank of Pakistan (SBP) received inflows from the IMF under the Extended Fund Facility (EFF) programme.

The foreign exchange reserves held by the State Bank of Pakistan (SBP) recorded an increase of $1.16 billion, to clock-in at $8.8 billion in the week ended September 2, following the receipt of the $1.16 billion loan tranche from the IMF.

The total liquid forex reserves held by the country stood at $14.5 billion. The net foreign exchange reserves held by the commercial banks amounted to $5.7 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 Rs27.07 or 13.21 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs231.92.

At the open market, the buying and selling of the dollar was recorded at Rs237 and Rs238 at 4:00pm PST.

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Rupee free-fall continues in interbank market

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