Rupee resumes falling spree against dollar

KARACHI: The rupee resumed falling spree against the dollar on Wednesday after making a recovery a day ago; following a sharp decline in the interbank foreign exchange market, dealers said.

The rupee lost 74 paisas to end at Rs268.63 against the greenback from the previous day’s closing of Rs267.89 in the interbank foreign exchange market.

The local currency crashed against the greenback on January 26, 27 and 30. The local unit fell Rs38.74, or 17 per cent, against the dollar during the last three sessions and hit the lowest level of Rs269.63 on January 30, 2023.

However, the local unit recovered again on Tuesday but failed to sustain the gaining momentum.

According to the currency dealers, the fall in the rupee was due to the adjustment against the dollar parity. The government during the last few months capped the dollar rate to avoid inflation.

However, after the IMF pressure, the government decided to let the market forces determine the rates. Therefore, the rupee deteriorated following this decision.

The government’s intention to cap the dollar rate adversely affected the inflows, especially the workers remittances and export receipts. Besides, huge losses in the shape of outflows due to uncertain exchange rate and a fall in the foreign investors’ confidence.

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.

On the flip side, 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 State Bank of Pakistan (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 exchange rate outlook is bleak, as the official foreign exchange reserves fell to around a nine-month low.

The official foreign exchange reserves of the SBP fell sharply to only $3.68 billion by the week ended January 20, 2023, compared with $4.601 billion on January 13, 2023.

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