Rupee recovers to Rs265.38 against dollar

KARACHI: The rupee recovered another Rs1.96 against the dollar on Wednesday, as the government initiated measures to comply with the conditions of the International Monetary Fund (IMF), dealers said.

The rupee closed at Rs265.38 against the greenback, compared with Tuesday’s closing of Rs267.34 in the interbank foreign exchange market.

The local unit recovered Rs11, or 4.05 per cent, after hitting the all-time low of Rs276.58 on February 3, 2023.
The dealers said the rupee was making gains, as the government has initiated measures to comply with the IMF demands.

The government had already increased the electricity and gas tariffs. Besides, it has imposed revised rates of sales tax and federal excise duty.

These measures not only will help the government avail the next IMF tranche of $1.2 billion but also curb the demand for imported goods.

The dealers said the falling exchange reserves and other foreign inflows remained the major threats to the stability of the local currency.

The overseas Pakistani workers have remitted around $16 billion to their homeland during the first seven months (July-January) of the fiscal year 2022/23.

The inflows of remittances recorded an 11 per cent decline during the period under review, compared with $18 billion received in the corresponding period of the last fiscal year.

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

The foreign exchange reserves held by the SBP witnessed a record high of $20.146 billion by the week ended August 27, 2021. Since then, these have dropped by $17.229 billion.

Meanwhile, 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.

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