Rupee continues falling spree against dollar

KARACHI: The rupee continued falling spree against the dollar on Tuesday, owing to the rising foreign currency demand for import payments, dealers said.

The rupee fell 32 paisas to end at Rs228.66 against the dollar from last day’s closing of Rs228.34 in the interbank foreign exchange market.

The dealers said the local currency remained under pressure due to the stalled International Monetary Fund (IMF) loan programme and the rising demand for the dollars for import payments.

The Pakistani authorities are desperately convincing the IMF to release the next tranche, as the country’s foreign exchange reserves fell to an alarming level.

The official foreign exchange reserves of the State Bank of Pakistan (SBP) fell to only $4.34 billion by the week ended January 6, 2023. The SBP’s forex reserves fell $1.233 billion from the level of $5.576 billion a week ago on December 30, 2022.

The current level of the official forex reserves fell below one month import cover. The import bill of the country for December 2022 was recorded at $5.16 billion, according to the Pakistan Bureau of Statistics (PBS). The benchmark foreign exchange reserves of the central bank should be at a level to provide three months import cover.

The foreign exchange reserves held by the central bank witnessed a record high of $20.146 billion by the week ended August 27, 2021. Since then, the official forex reserves of the SBP dropped $16.803 billion.

The dealers also said the inflows of remittances and export receipts were also showing a declining trend, making shortage of dollars in the interbank market.

Due to this shortage, the banks were unable to open the letters of Credit (LCs) for import payments.

The rupee fell to the all-time low level of Rs239.94 to the dollar on July 28, 2022.