KARACHI: The rupee weakened 25 paisas against the dollar on Wednesday, owing to the lack of inflows under export receipts and remittances, dealers said.

The local currency ended at Rs228.91 against the greenback from the previous day’s closing of Rs228.66 in the interbank foreign exchange market.

The dealers said a fall in the inflows under export receipts and remittances created shortage of foreign currency in the local market.

The delay in other inflows mainly from the International Monetary Fund (IMF) also put pressure on the local currency. Due to the lack of inflows, the foreign exchange reserves of the country are falling sharply.

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 foreign exchange reserves declined below one month’s 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.

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 of Rs239.94 to the dollar on July 28, 2022.

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