Dollar advances to PKR 224.16 at interbank closing on Dec 07

Dollar advances to PKR 224.16 at interbank closing on Dec 07

KARACHI: The US dollar gained five paisas against Pakistani Rupee (PKR) on Wednesday to end at PKR 224.16 in interbank foreign exchange market.

A day earlier, the exchange rate was closed at PKR 224.11 to the dollar in interbank foreign exchange market.

Currency experts said that higher demand for import and corporate payment kept the exchange rate under pressure.

READ MORE: Dollar hits PKR 224.11 amid foreign payment demands

They said that falling foreign exchange reserves and rising scheduled repayment against foreign debt also increased the volatility in the foreign exchange market.

The foreign currency market was also under pressure due to reports of economic emergency to be imposed. However, the Finance Division a day earlier, denied any such proposal was under consideration.

Last week the rupee showed resilience against the dollar due to rollover approval of $3 billion by the Saudi government.

The Saudi Fund for Development (SFD) extended the term for the deposit provided by the Kingdom of Saudi Arabia in the amount of $3 billion to the State Bank of Pakistan.

READ MORE: Rupee declines 22 paisas to dollar amid payment demand

However, recent payment of over a billion dollars against Sukuk by the government to international commercial investors also put pressure on the exchange rate.

The currency experts said that tightening of monetary policy and contraction in import payment demand helped the rupee to make recovery.

They said that the SBP should be more vigilant because latest efforts were not enough as Pakistan’s external sector was facing huge challenges.

READ MORE: PKR ends stable to dollar on $3 billion Saudi rollover

Latest investment data revealed the foreign direct investment plunged by 52 per cent in first four months of the current fiscal year.

The current account deficit recorded a contraction in the first four months of the current fiscal year, but it swelled when compared with the previous month.

Pakistan needs foreign inflows on urgent basis to avoid balance of payment crisis. The foreign exchange reserves of Pakistan fell sharply during past few months making it difficult for the government to fulfill its foreign repayment commitments.

Official foreign exchange reserves of State Bank of Pakistan (SBP) have depleted by $327 million by week ended November 25, 2022 leaving import cover of only one and half months.

The official foreign exchange reserves of the SBP fell by $327 million to $7.499 billion by week ended November 25, 2022 as compared with $7.826 billion a week ago.

READ MORE: SBP foreign exchange reserves fall to $7.5 billion

The import bill of the country was at $4.71 billion in October 2022, according to Pakistan Bureau of Statistics (PBS). According to the month import bill the existing foreign exchange reserves of the SBP have reduced to cover only 1.56 months import payment.

The central bank attributed the decline in official reserves to repayment against external debt.

The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP dropped by $12.647 billion.

The total reserves of the country fell by $267 million to $13.378 billion by week ended November 25, 2022 as compared with $13.645 billion a week ago.

The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $13.850 billion.

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