Rupee back on downward stream

KARACHI: The Pakistani rupee fell for the second consecutive session against the dollar on Thursday, owing to the absence of economic fundamentals, hitting investors’ confidence, dealers said.

The exchange rate witnessed a loss of 50 paisas against the dollar to reach Rs218.38 from the previous day’s closing of Rs217.88 in the interbank foreign exchange market.

Currency experts said that the local currency is back on a downward stream, after witnessing a 13-day successful run following the appointment of Ishaq Dar as finance minister.

The rupee’s gains against the dollar was mainly sentiment-driven as investors expected Dar to take measures for increasing the value of the local unit, they added.

However, in the absence of economic fundamentals, the rupee failed to maintain its winning streak in the interbank market where it shed gains for the second consecutive session.

An increasing demand for the greenback was also witnessed after the importers rushed to buy the dollar over a likely increase in its value against the local unit.

The workers’ remittances by overseas Pakistanis slowed down to a four-month low at $2.44 billion in September 2022. The receipts contracted 10.5 per cent in September, compared with the inflows of $2.72 billion in the previous month.

On the inflows front, the Asian Development Bank (ADB) on September 5, announced it would provide aid of around $2.5 billion for relief operations in the wake of devastating floods that have caused catastrophic damage in Pakistan.

The country is also expected to receive around $1 billion from the United Nations (UN) and $1 billion from the World Bank during a period between October and December.

The trade deficit of Pakistan recorded a decline of 21.42 per cent to clock-in at $9.2 billion in the first quarter of the fiscal year 2023, compared with that of $11.7 billion recorded during the same period of fiscal year 2022.

The total imports during the first quarter stood at $16.3 billion, compared with $18.71 billion recorded during the same period of last fiscal year. The exports rose to $7.1 billion, from $6.99 billion in the first quarter of last year.

On the flip side, the foreign exchange reserves of the country have been on a constant decline due to external debt repayment.

The foreign currency reserves held by the State Bank of Pakistan (SBP) fell by $106 million to reach $7.89 billion during the week ended September 30, compared with $8 billion on September 23.

The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $13.58 billion. The Net reserves held by banks amounted to $5.68 billion.

The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs13.53 or 6.50 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs218.38.

At the open market, the buying and selling of the dollar was recorded at Rs220.25 and Rs222.5 at 3:30pm PST.