• The exchange rate shed 78 paisas against the dollar to reach Rs221.43.
• Currency experts said that the rupee returned to its downward momentum.
• The official foreign exchange reserves of the SBP fell $157 million to $7.44 billion by the week ended October 21.

KARACHI: The Pakistani rupee came under pressure against the dollar on Wednesday, as the investors’ sentiments cooled down regarding Finance Minister Ishaq Dar’s meeting with key stakeholders, dealers said.

The exchange rate shed 78 paisas against the dollar to reach Rs221.43 from the previous day’s closing of Rs220.65 in the interbank foreign exchange market.

Currency experts said that the rupee returned to its downward momentum amid deteriorating macroeconomics of the country which dampened investors’ sentiments.

The prime minister along with key ministers are in China to secure investment deals and assistance. However, the uncertainty on the domestic economic and political fronts remain a major concern for the investors, they added.

The government is also due to make a payment on an international Sukuk maturing in less than two months, which is likely to put further pressure on the local unit.

On the global stage, the dollar slipped on Wednesday as investors awaited a Federal Reserve policy decision amid speculation it might indicate a slowdown in future rate hikes.

The investors are widely expecting a 75 basis points rate hike, the fourth such increase in a row. But for the December meeting, the futures market is split on the odds of a 75 or 50 basis points increase.

On the flip side, the foreign exchange reserves are on a constant decline as the official foreign exchange reserves of the SBP fell $157 million to $7.44 billion by the week ended October 21, compared with $7.59 billion a week ago.

The central bank attributed the decline to external debt repayments. The SBP said it had received $1.5 billion from the Asian Development Bank (ADB) in value on October 26. These proceeds will be reflected in the SBP reserves for the week ending October 28.

The total foreign exchange reserves of the country fell $89 million to $13.16 billion by the week ended October 21, compared with $13.25 billion a week ago.

The foreign exchange held by the commercial banks witnessed an increase of $68 million to $5.72 billion by the week ended October 21, as against $5.654 billion on October 14.

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.

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 Rs16.58 or 8.09 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs221.43.

At the open market, the buying and selling of the dollar was recorded at Rs225 and Rs227.25 at 4:45pm PST.

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