Rupee gains 7 paisas against dollar

• The rupee gained seven paisas against the dollar on Monday.
• The local unit closed at Rs259.92 against the greenback from last Friday’s closing.
• The local currency recorded a historic low of Rs276.58 against the dollar on February 3, 2023.

KARACHI: The rupee gained seven paisas against the dollar on Monday, owing to the inflows received from China, dealers said.

The local unit closed at Rs259.92 against the greenback from last Friday’s closing of Rs259.99 in the interbank foreign exchange market.

The dealers said that last week the country received around $700 million from the China Development Bank (CDB), which would shore up the foreign exchange reserves of the country.

The local currency recorded a historic low of Rs276.58 against the dollar on February 3, 2023. However, after touching the lowest level, the local currency recovered 6 per cent, or Rs16.88, against the greenback till the end of the market on February 27, 2023.

The rupee is making recovery due to the International Monetary Fund (IMF) conditions that have been met by the local authorities to obtain a tranche of $1.2 billion under the Extended Fund Facility.

The country is expecting to finalise the staff-level agreement by this week, which will make it possible for the release of the tranche.

To meet the IMF conditions, the government announced a phenomenal increase in the prices of electricity, gas and petroleum products. Besides, it also announced a mini-budget to generate additional revenue of Rs170 billion.

The country’s foreign exchange reserves depleted sharply during the last one year and presently are at an alarming level. However, in the last two weeks, the official forex reserves slightly increased, giving some breathing space to the local currency.

The official foreign exchange reserves of the State Bank of Pakistan (SBP) increased $65 million to $3.258 billion by the week ended February 17, 2023, compared with $3.193 billion a week ago.

The current level of the official foreign exchange reserves are only to provide import cover for around two weeks, or 19 days.

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

The official foreign exchange reserves of the central bank fell sharply to an almost nine-year low. Previously, the official forex reserves of the SBP were seen at $3.19 billion in February 2014.

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