Rampant US dollar sinks Pakistani rupee to historic low of Rs276.58
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The free-floating of rupee continued to make the local currency extremely vulnerable to the onslaught of mighty US dollar as Pakistani rupee lost by another hefty margin of Rs5.22 in the interbank trading, reported 24NewsHD TV channel.
According to information provided by money dealers, the rupee kept up its downward trajectory against the US dollar which shot up to Rs278 and then settled at Rs276.58 for the day, up by Rs5.22, during Friday’s trade.
Yesterday, the rupee was slumped by Rs2.53 in the interbank market, closing at a new historic low of Rs271.36 against the dollar. However, the gap between the interbank and open market rate was narrowed down to Rs275.50.
Interbank closing #ExchangeRate for todayhttps://t.co/lIkhkkLfCi pic.twitter.com/waVjyFSTUI
— SBP (@StateBank_Pak) February 2, 2023
The local currency fall sharply in three sessions on January 26, 27 and 30, 2023. The rupee fell by PKR 38.74 or 16.77 per cent to PKR 269.63, the lowest level against the dollar.
Currency experts said that despite a free-floating exchange rate, the situation was still uncertain and exporters and others were reluctant to sell their dollars in the market.
Apart from this, the depleting forex reserves are causing a great concern for the rupee stability.
The foreign exchange reserves held by the State Bank of Pakistan recorded ten years low, dropped by $592.2 million to stand at $3.08 billion during the week ended on January 27, 2023, data published by the SBP on Thursday showed.
Total liquid foreign #reserves held by the country stood at US$ 8.74 billion as of January 27, 2023.
— SBP (@StateBank_Pak) February 2, 2023
For details https://t.co/WpSgomnKT3 pic.twitter.com/LE9eay1XU2
The SBP said that the decline in foreign exchange reserves were due to scheduled external repayment.
The present level of the official reserves have fallen below one month import cover. The import bill of the country for the month of January 2023 was recorded at $4.856 billion, according to Pakistan Bureau of Statistics (PBS).
The benchmark foreign exchange reserves of a central bank should be at a level to provide three months import cover.
The Reuters quoted Tahir Abbas, head of research at Arif Habib Ltd as saying: ““The country is in dire need of fresh inflows and the resumption of the IMF programme as soon as possible to avoid the crisis.”
Pakistan is currently holding negotiations with the IMF mission which is in Islamabad for talks on the ninth review.
The Fund had set several conditions for resuming the bailout, including a market-determined exchange rate for the local currency and an easing of fuel subsidies. The central bank recently removed a cap on exchange rates and the government raised fuel prices by 16pc.
The impact of the increase in the value of the dollar is also being felt by citizens as imports become more expensive, and the cost of living rises.
Reporter Ashraf Khan