Rupee closes flat in interbank market

KARACHI: The Pakistani rupee closed unchanged against the dollar on Thursday as the faltering economy has reduced the business activities besides delays in the inflows from global lending institutions, dealers said.

The exchange rate remained flat, where it closed at Rs224.71 from the previous day’s closing of Rs224.71 against the dollar in the interbank foreign exchange market.

Experts said that the local unit failed to recover due to continuous shocks of uncertain condition on the economic fronts as well as the external front.

The government remains unsuccessful in securing any funds from global lending institutions and friendly countries to boost the country’s foreign exchange reserves, they added.

Despite the International Monetary Fund (IMF) official saying that the discussions to date for the ninth review of the Extended Fund Facility (EFF) have been productive, the absence of any positive development remains distant.

The government took various measures to reduce the outflow of the greenback, such as curbing imports. However, these measures seem to backfire as the exports of the country have witnessed a drop.

Pakistan’s exports are falling at a time when the country is in a dire need of the greenback to buffer its foreign exchange reserves and ensure timely external payments.

According to the data released by the Pakistan Bureau of Statistics (PBS), the exports fell to $2.37 billion in November, compared with $2.9 billion in the same month of the last 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.

Pakistan’s domestic debt crossed the Rs50 trillion mark by the end of October 2022. The domestic debt of the country surged to Rs50.15 trillion by October 2022, compared with Rs40.2 trillion reported by the end of the same month last year, showing a significant increase of Rs10 trillion in debts in one year.

The foreign exchange reserves held by the State Bank of Pakistan fell $134 million to reach $7.82 billion during the week ended November 18, compared with $7.95 billion on November 11.

According to the central bank, the decrease in reserves came due to external debt repayment.

The overall liquid foreign currency reserves held by the country, including the net reserves held by banks other than the SBP, stood at $13.64 billion, while the net reserves held by banks amounted to $5.81 billion.

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 local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs19.86 or 9.69 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs224.71.

At the open market, the buying and selling of the dollar was recorded at Rs231.7 and Rs234 at 3:45pm PST.