Rupee recovers sharply against dollar

KARACHI: The rupee made a sharp recovery against the dollar to close the year at Rs176.51 on Friday in the interbank foreign exchange market, dealers said.

The exchange rate witnessed an appreciation of Re1 in the local unit against the dollar from the previous day’s closing of Rs177.51.

The rupee cumulatively recovered Rs1.73 against the foreign currency during the last two days of trading. The local currency recorded an all-time low of Rs178.24 against the greenback on December 29, 2021.

The dealers said the market remained optimistic over the mini-budget presented by the government a day ago. A number of measures have been taken to restrict the import of luxury and non-essential items.

Besides, they said the State Bank of Pakistan (SBP) had also intervened during the last two days to stabilise the rupee by the year-end.

The dealers said the rising import bill and the current account deficit would remain a challenge for the local currency in the coming days. Further, the decline in the foreign exchange reserves also threatened the rupee stability.

The official foreign exchange reserves of the central bank slipped $299 million to $17.85 billion by the week ended December 24, 2021, compared with $18.15 billion a week ago. The official reserves of the SBP will provide the import cover for 2.25 months, which is below the benchmark of three months.

The import bill of the country surged 69.57 per cent to $33 billion during the first five months of the current fiscal year, compared with $19.47 billion in the corresponding period of the last fiscal year.

Meanwhile, the current account deficit ballooned to $7.1 billion during the first five months of the fiscal year 2021/22, compared with a surplus of $1.87 billion in the same period of the last fiscal year.

However, in the open market, buying and selling of dollars was recorded at Rs176.80/Rs178.50 at 3:50pm PST.

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