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Rupee continues to drop in interbank

Rupee continues to drop in interbank

Rupee continues to drop in interbank

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KARACHI: The Pakistani rupee depreciated further against the dollar on Tuesday as the economic and political conditions of the country continued to deteriorate, dealers said.

The exchange rate shed 18 paisas to close at Rs225.12 from the previous day’s closing of Rs224.94 against the dollar in the interbank foreign exchange market.

Experts said that local currency remained under pressure as the foreign exchange reserves of the country depleted to an alarmingly low level.

The political uncertainty added to the pressure on the business environment as Pakistan Tehreek-e-Insaf (PTI) called for the dissolution of the provincial assemblies.

To counter such measures, the coalition parties in the federal government submitted a notice in the Punjab Assembly seeking permission to table a no-confidence motion against the chief minister of Punjab.

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At a time when Pakistan is going through one of its tough periods, the political instability is further denting the recovery of the local unit.

Due to its uncertain future, the government is finding it hard to secure any funding or support from friendly countries and multilateral institutions to boost the country’s foreign exchange reserves.

As for the macroeconomics of the country, the current account deficit declined over 85 per cent on a year-on-year basis to clock in at $0.28 billion in November.

The imports of the country have reduced. However, the experts are of the view that exports have declined even further due to delays in the opening of letter-of-credit (LCs) to import raw-material for the export-oriented industries.

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.

Besides, the negotiations between Pakistan and the International Monetary Fund (IMF) have been stalled which deprived the country of foreign exchange for boosting its foreign exchange reserves.

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The foreign exchange reserves held by the State Bank of Pakistan (SBP) fell $14.9 million to reach 6.7 billion during the week ended December 9, compared with $6.71 billion on December 2.

The central bank, without giving specific reason, said that the “SBP’s reserves did not record any major change during the week ended on December 9, 2022”.

Overall, the liquid foreign currency reserves held by the country, including the net reserves held by banks other than the SBP, stood at $12.57 billion. The net reserves held by banks amounted to $5.87 billion.

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 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.

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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 Rs20.27 or 9.89 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs225.12.

At the open market, the buying and selling of the dollar was recorded at Rs231.8 and Rs234.1 at 5:00pm PST.

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