KARACHI: The US dollar fell to Pakistani Rupee (PKR) 220.12 on Tuesday after the International Monetary Fund (IMF) approved transfer of $1.1 billion to the country under Extended Fund Facility (EFF).

The rupee recovered Rs1.80 to end at Rs220.12 against the dollar from previous day’s closing of Rs221.92 in interbank foreign exchange market.

READ MORE: Dollar strengthens to PKR 221.92 amid political uncertainty

The executive board of the IMF completed its Seventh and Eighth review for Pakistan under the Extended Fund Facility (EFF) which is likely to lead to the release of $1.1 billion tranche.

This will take total disbursement by IMF under the EFF program to $3.9 billion to Pakistan and will help support foreign exchange reserves of the country.

Additionally, in order to support program implementation and meet the higher financing needs in FY23 as well as catalyze additional financing, the IMF Board has approved an extension of the EFF till June 2023 instead of September 2022. The board also approved augmentation of access by SDR 720 million ($1 billion) bringing total access to $6.5 billion.

READ MORE: Dollar surges to PKR 220.66 ahead IMF board meeting

The rupee fell to the historic low of Rs239.94 against the dollar on July 28, 2022.

The currency market witnessed a non-stop depreciation in rupee value since the government lifted the ban on import of luxury and non-essential items. Besides, the prices of international oil are also seeing a rising trend.

The government on August 20, 2022 withdrew the ban on import of luxury and non-essential items. The government on May 19, 2022 imposed this ban in the wake of massive depreciation in rupee value and significant depletion of foreign exchange reserves.

The rupee witnessed a continuous decline against the dollar since the government lifted the ban. The local currency depreciated continuously during the week (August 22 – August 26) and fell Rs6.01 or 2.8 per cent during the period.

READ MORE: Pakistani Rupee falls for 4th day; dollar climbs up to Rs219.14

The currency experts said that the vertical decline in foreign exchange reserves also put pressure on rupee value.

Pakistan’s foreign exchange reserves fell by $91 million to $13.522 billion by the week ended August 19, 2022. The foreign exchange reserves of the country were at $13.613 billion a week ago i.e. August 12, 2022.

The country’s foreign exchange reserves hit an all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $13.703 billion.

READ MORE: Dollar gains for third day, ends at PKR 218.38

The official foreign exchange reserves of the State Bank witnessed a decline of $87 million to $7.81 billion by the week ended August 19, 2022 as against $7.897 billion a week ago.

The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by the week ended August 27, 2021. Since then the official reserves of the SBP declined by $12.336 billion.