Entangled in the quagmire of US dollars flight and ensuing forex reserves crunch, the local currency has failed to sustain its weight in the interbank trading thus keeping up its downward trajectory, reported 24NewsHD TV channel.

According to money dealers, the Pakistani rupee depreciated by four paisas in the interbank trading activity on Thursday. The US dollar gained four paisas and ended the day at Rs226.41.

https://twitter.com/StateBank_Pak/status/1608398159004446720

Yesterday, the PKR shed 22 paisa against the greenback, letting the latter to be concluded at Rs226.37. 

https://twitter.com/StateBank_Pak/status/1608070624588480514

Pakistan is in the grip of serious forex reserves depletion giving way to the remours that the country might default in coming months.

However, on Wednesday, Finance Minister Ishaq Dar told investors during a ceremony, in which he participated via video link, that Pakistan was not going to default. Though, he admitted that economy was in a dire situation. 

“We’re in a tight position. We don’t have $24bn in foreign exchange reserves that our (last) government left in 2016. But that’s not my fault. It’s the system’s fault….But, there is no way that we are going to default.”

Despite his assurances, the situation on economic front is grim as millions of dollars are being smuggled out to Afghanistan. Pakistan forex reserves are depleting fast. The great difference between the rates of US dollar in interbank and open market is leading people to use illegal means of Hawala and Hundi to send their currencies.

On top of it, the State Bank on Pakistan has lifted a ban on imports, withdrawing the condition of prior approval for banks in processing the import payments. 

The central bank in pursuance to the federal government directions imposed restriction in May 2022 on opening of letter of credits (LCs) for import of goods falling under Chapter 84, 85 and certain items in 87 of Pakistan Customs Tariff. The restrictions were imposed in order to prevent dollar flight and rescued the local currency from massive depreciation. However, such measure could not rescue the local unit. 

The local currency witnessed a decline of 10.50 per cent since the start of the current fiscal year. The exchange rate was at PKR 204.85 at the start of the current fiscal year on July 01, 2022 and fell to the present level of PKR 226.50.

 

Reporter Ashraf Khan