Rupee eases 16 paisas against dollar

KARACHI: The rupee eased by 16 paisas against the dollar on Monday, owing to a fall in the foreign exchange reserves and the rising foreign currency demand for import payments, dealers said.

The rupee fell to Rs269.44 against the greenback from last Friday’s closing of Rs269.28 in the interbank foreign exchange market.

The dealers said the foreign currency market remained volatile due to a sharp decline in the forex reserves of the country and the rising dollar demand for import payments.

The official forex reserves of the State Bank of Pakistan (SBP) fell $169 million to $2.917 billion by the week ended February 3, 2023, compared with $3.086 billion a week ago on January 27, 2023.

The current level of the official foreign exchange reserves are only to provide import cover for around two weeks or 18 days.

The import bill for January 2023 has been recorded at $4.856 billion, as per the Pakistan Bureau of Statistics (PBS). The benchmark foreign exchange reserves of a central bank should be at a level to provide three months import cover.

The official foreign exchange reserves of the central bank fell sharply to an almost nine-year low. Previously, the official reserves of the SBP were seen at $3.87 billion in February 2014.

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 $17.229 billion.

The dealers said the government is also relaxing the import payments condition, which pressured the local currency.
Swift clearance of imported consignments is also one of the conditions of the IMF to resume the bailout package under the Extended Fund Facility (EFF). The rupee witnessed a significant fall during January 26 to February 3 period and hit the all-time low of Rs276.58.

Earlier, the government capped the dollar rate to ensure exchange rate stability. Owing to the efforts to control the exchange rate and curb the demand at home, the import bill fell 22.53 per cent to $36 billion during July-January of the fiscal year 2022/23, compared with $46.60 billion in the corresponding period of the last fiscal year.

On the flip side, the exports also recorded a decline of 7.16 per cent to $16.47 billion during the period under review, compared with $17.74 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 period of the last fiscal year.

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