Rupee depreciates 57 paisas against dollar

KARACHI: The rupee ended 57 paisas down against the dollar on Friday, owing to higher demand for the foreign currency for import payments.

The exchange rate ended at Rs175.24 against the greenback from the previous day’s closing Rs174.67 in the interbank foreign exchange market.

It was the second straight day when the dollar strengthened against the rupee; following the statement of the adviser to the prime minister on finance and revenue.

The rupee lost Rs1.5 against the dollar during the last two sessions. Two days ago, Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin had said that he could not give a certain date about the International Monetary Fund (IMF) inflows. However, he said, the IMF wanted prior actions before the board approval for the next tranche.

Read more: Rupee gains 77 paisa against dollar

The foreign exchange market is still uncertain about the inflows to support the falling rupee.

On October 26, 2021, a pledge was made by the Saudi government to transfer cash, amounting to $3 billion to the State Bank of Pakistan (SBP) but the same was not realised so far. Now, the uncertainty about the IMF loan tranche also resulted in a panic buying of the dollars.

Last week, the central bank announced to increase the average CRR, to be maintained during a period of two weeks by scheduled banks, from 5 per cent to 6 per cent and the minimum CRR to be maintained each day from 3 per cent to 4 per cent.

CRR is the amount of money that the banks are required to keep with the State Bank of Pakistan and is applicable on the demand and time liabilities with the tenor of less than a year.

The time liabilities with the tenor of more than a year would continue to be exempted from the maintenance of cash reserves.

Since this announcement, the rupee recovered during the three consecutive sessions of the current week.

The SBP decided the measure after the rupee hit an all-time low of Rs175.73 against the dollar on November 12, 2021.

The burgeoning import bill is continuously threatening the balance of payments of the country. The import bill registered a growth of 65.15 per cent to $25.06 billion during July-October 2021, compared with $15.17 billion in the same period of the last fiscal year, according to the Pakistan Bureau of Statistics.

The rupee remained under pressure since the start of the current fiscal year. The local currency fell Rs17.70, or 11.23 per cent from June 30, 2021 closing of Rs157.54 to the closing of Rs175.24 on November 19, 2021.