Melting forex reserves make Pakistani rupee to fast lose ground
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Day by day, the Pakistani currency is losing its ground against the US dollar due to its depleting forex reserves which have plunged to multi-year low to $6.72 billion by the week ended on December 2, 2022, making money market jittery, reported 24NewsHD TV channel.
According to the money dealers, the PKR was depreciated by 03 paisa against the US dollar in Friday’s trading session in the interbank as the American currency was exchanged for Rs224.40 up by 03 paisa.
On Thursday, the US dollar was closed at Rs224.37.
Almost the whole week the local unit remained under pressure mainly due to melting foreign exchange reserves and other bleak micros.
The official reserves of the State Bank of Pakistan fell by $784 million to $6.715 billion by week ended on Dec 02, 2022 when compared with $7.499 billion a week ago i.e. November 25, 2022.
Previously, the SBP reserves were seen at $7 billion in April 2014.
The current forex reserves could only cover over a month’s imports.
The depleting foreign exchange reserves are making money market jittery and depressed and the exchange rate is unstable.
Though it could be observed that still the rupee depreciation is not very sharp because of the tough measures adopted by the central bank. However, the exchange rate for the US dollar in the unofficial market is over Rs250.
Currency experts say that the exchange gap between open market and the interbank market is over Rs18-20.
According to the experts, the lack of foreign inflows through official channels was encouraging hawala and hundi and most of the senders were preferring informal channels to get higher rates for their greenbacks.
The central bank attributed the fall in foreign exchange reserves to a payment of $1bn against the maturity of sukuk (Islamic bonds).
Last week the rupee showed resilience against the dollar due to the rollover approval of $3 billion by the Saudi government.
Saud Arabia again has promised to support Pakistan as much as it can.
Saudi Finance Minister Mohammed Al Jadaan said on Thursday that his government looked to help shore up alliances with countries struggling with the impact of rising inflation.
The Saudi government will “continue to support Pakistan as much as we can,” Al Jadaan said at a press conference in Riyadh.
Reporter Ashraf Khan