Rupee sinks to historic low

KARACHI: The rupee hit the all-time low against the dollar on Friday, amid narrowing foreign exchange reserves, besides the government’s decision to lift the cap on the exchange rate, dealers said.

The exchange rate shed Rs7.17 to close at Rs262.60 from the previous day’s closing of Rs255.43 against the greenback in the interbank foreign exchange market.

Experts said the local unit witnessed a drastic decline, as the government decided to lift the cap on the dollar rate to ensure successful negotiations with the International Monetary Fund (IMF) for the continuation of the Extended Fund Facility (EFF) programme.

Reportedly, the government capped the dollar value during the last five months to check the inflation. However, this resulted in a huge gap between the rates of the interbank foreign exchange market and the open market.

The foreign exchange reserves of the State Bank of Pakistan (SBP) dropped a massive $923 million to a mere $3.68 billion, the lowest level since February 2014.

The total liquid foreign exchange reserves held by the country stood at $9.5 billion, while the net forex reserves held by the commercial banks stood at $5.8 billion.

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.

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 local currency remained under pressure since the start of the current fiscal year. It lost Rs57.75, or 28.19 per cent, from Rs204.85 against the dollar on June 30, 2022 to the current level of Rs262.60.

In the open market, the buying and selling of the dollar was recorded at Rs264 and Rs266 at 4:15pm PST.

Also Read

Philippine economy grows at 7.2% rate in Q4 2022, higher than expected

The Philippine economy grew 7.2% annually in the fourth quarter of last...