Rupee recovers six paisas against dollar

KARACHI: The rupee recovered six paisas against the dollar on Thursday, amid mounting demand for external payments, dealers said.

The exchange rate closed at Rs174.98 to the dollar from the previous day’s closing of Rs175.04 in the interbank foreign exchange market.

The dealers said the dollar demand for import and corporate payments remained high during the day. However, inflows of export payments and remittances helped the rupee make some recovery.

The measure of the central bank to increase the interest rate had not effectively supported the local currency, they said.

Last weekend, the State Bank of Pakistan (SBP) announced an increase of 150 basis points in the key policy rate to bring it to 8.75 per cent. The rate was increased to ease pressure on the local currency. Following the announcement, the market witnessed recovery in the local unit.

The dealers said the large imports are a major threat to the rupee stability. The import bill registered 65 per cent growth to $25.1 billion during the first four months of the current fiscal year, compared with $15.17 billion in the corresponding months of the last fiscal year.

The import bill also resulted in ballooning of the current account deficit. Pakistan’s current account deficit sharply widened to $5.08 billion during the first four months (July-October) of the current fiscal year, compared with a surplus of $1.31 billion in the same period of the last year.

The rupee remained under pressure since the start of the current fiscal year. The local currency fell Rs17.44, or 11.07 per cent, from June 30, 2021 closing of Rs157.54 to the closing of Rs174.98 on November 25, 2021.

The local unit hit the all-time low of Rs175.73 against the greenback on November 12, 2021 in the interbank foreign exchange market.

In the open market, the buying and selling of the dollar were recorded at Rs177/Rs178.25 at the time of filing this report.

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