Rupee remains on downward stream

KARACHI: The Pakistani rupee extended its losses against the dollar on Thursday on the back of reduced inflows and increasing pressure on the economy, dealers said.

The exchange rate shed 11 paisas against the dollar to reach Rs223.92 from the previous day’s closing of Rs223.81 in the interbank foreign exchange market.

Currency experts said that the local unit remained under pressure as the investors have been rattled over the delay in negotiations with the International Monetary Fund (IMF) programme as the country continues to suffer from low foreign exchange reserves.

The country’s economy is under severe pressures owing to dried up inflows besides reduced economic activities and investors shying away from making new investment in the local sectors, they added.

The growing trust deficit in the country’ ability to make payments is evident from the foreign investors’ withdrawal of $660 million from Naya Pakistan Certificates (NPC) during the last six months.

The withdrawal of funds from NPC coupled with the absence of new investments have aggravated hardship for the country which is facing a serious problem of falling foreign exchange reserves.

The foreign exchange reserves held by the State Bank of Pakistan (SBP) witnessed an increase of $3 million to reach $7.96 billion during the week ended November 11, compared with $7.95 billion on November 4.

The country’s total liquid foreign exchange reserves rose by $75.2 million to clock-in at $13.79 billion as of November 11, up from $13.72 billion during the previous week.

The net foreign exchange reserves held by the commercial banks surged by $72.2 million to $5.83 billion at the end of last week, compared with $5.76 billion a week earlier.

The net foreign direct investment (FDI) in Pakistan slumped 62 per cent to $95 million in October 2022, compared with $247.3 million in the same month last year. However, the net FDI was up 13 per cent, compared with $84 million recorded in September 2022.

During the first four months of fiscal year 2023, the net FDI dropped 52 per cent year-on-year to $348 million, compared with $726 million during the same period of last fiscal year.

The workers remittances have also declined 15.7 per cent to reach $2.21 billion in October, compared with $2.62 billion in the same month of the last year.

On a monthly basis, the remittances witnessed a decline of 9 per cent, compared with $2.43 billion received during September.

The textile exports declined 15.2 per cent to reach $1.35 billion in October, compared with $1.6 billion in the corresponding month of the last year.

On a monthly basis, the exports declined 11.1 per cent with a major decline in components including cotton cloth, knitwear, bedwear, towels, and readymade garments.

The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs19.07 or 9.30 per cent from

Rs204.85 to dollar on June 30, 2022 to the current level of Rs223.92.

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