Rupee makes new low of Rs269.63 against dollar

KARACHI: The rupee recorded another sharp decline against the dollar on Monday and reached a new all-time low of Rs269.63 in the interbank foreign exchange market, dealers said.

The rupee recorded a decline of Rs7.03 to end at Rs269.63 from last Friday’s closing of Rs262.60 in the interbank foreign exchange market. The local unit fell Rs38.74, or 17 per cent, against the dollar during the last three sessions.

Experts said that the fall in the rupee value was due to the adjustment against the dollar parity. During the last few months, the government has capped the dollar rate to curtail inflation.

However, after the International Monetary Fund (IMF) pressure, the government decided to let the market forces determine the rates. Therefore, the rupee deteriorated.

The major reason behind the sharp fall in the local currency was to make successful talks with the IMF for the continuation of the loan programme under the Extended Fund Facility.

The government’s intention to cap the dollar rate adversely affected the inflows, especially the workers remittances and export receipts. Besides, huge losses in the shape of outflows due to uncertain exchange rate and a fall in the confidence of foreign investors.

Despite the efforts to control the exchange rate and curbing the demand at home, the import bill fell 23 per cent to $31 billion during July-December of the fiscal year 2022/23, compared with $40.56 billion in the corresponding period of the last fiscal year.

On the flip side, the exports also recorded a decline of 6 per cent to $14.26 billion during the period under review, compared with $15.12 billion in the same period of the last fiscal year.

Meanwhile, the inflows of workers remittances also declined 11 per cent in the first half (July-December) of the fiscal year 2022/23. The SBP received $14.05 billion during the first half of the current fiscal year, compared with an inflow of $15.81 billion in the corresponding half of the last fiscal year.

The exchange rate outlook is bleak, as the official foreign exchange reserves fell to around nine-month low.

The official foreign exchange reserves of the State Bank of Pakistan (SBP) fell sharply to only $3.68 billion by the week ended January 20, 2023, compared with $4.601 billion on January 13, 2023.

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