KARACHI: The Pakistani rupee recorded a slight recovery against the dollar on Friday after the Asian Development Bank (ADB) board approved financial assistance to the cash-starved country, dealers said.

The exchange rate witnessed a gain of 11 paisas against the dollar to reach Rs220.84 from the previous day’s closing of Rs220.95 in the interbank foreign exchange market.

Currency experts said that the market sentiments improved following the announcement that the ADB will lend a helping hand to Pakistan amidst devastating floods.

The ADB approved $1.5 billion in financing to help Pakistan provide social protection, promote food security, and support employment for its people amid devastating floods and global supply chain disruptions, a statement by the bank said.

Agreement signing and release of funds will begin in the coming week on Monday Oct 24, 2022, Finance Minister Ishaq Dar tweeted.

On the flip side, Fitch Ratings downgraded Pakistan’s long-term foreign currency Issuer Default Rating (IDR) to ‘CCC+’ from ‘B-‘. The rating agency reasoned the worsening liquidity and policy risks for downgrading the rating of the country.

The foreign exchange reserves held by the State Bank of Pakistan (SBP) remained almost flat. The foreign currency reserves held by the central bank were up $0.3 million to reach $7.59 billion during the week ended on October 14, compared with $7.59 billion on October 7.

The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13.25 billion. The net reserves held by banks amounted to $5.65 billion.

Pakistan’s current account deficit shrank more than 37 per cent on a year-on-year basis during the first quarter of the fiscal year 2023.

During the first three months of the fiscal year 2023, the current account deficit of Pakistan amounted to $2.2 billion, compared with $3.52 billion recorded during the same period last year, according to a monthly report published by the central bank.

The trade deficit in services narrowed by 26.22 per cent on a year-on-year basis to clock-in at $647 million in the first quarter of the fiscal year 2022/23, from a deficit of $877 million recorded in the same period of last fiscal year.

Similarly, the deficit has shrunk by 24 per cent on a monthly basis and 14.85 per cent on a yearly basis to stand at $172 million in September, compared with $227 million in August and $202 million in the same month of last fiscal year.

The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs15.99 or 7.8 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs220.84.

At the open market, the buying and selling of the dollar was recorded at Rs222.7 and Rs224.9 at 5:30pm PST.