KARACHI: The US Dollar fell sharply against the Pakistani Rupee (PKR) in early interbank trading Monday September 26, 2022 due to positive sentiments prevailed on reports that Ishaq Dar is assuming the charge of finance minister.
The US dollar lost around PKR 3.65 and being traded at PKR 236.00 from last Friday’s close of PKR 239.65 in interbank foreign exchange market.
A day earlier, Miftah Ismail through a Tweet announced that he verbally tendered resignation as finance minister to PML (N) leadership. The report suggested Ishaq Dar would assume the charge as the finance minister.
Dar served as finance minister during past tenure of the PML (N) government. The market was hoping that Dar would manage the exchange rate as he did during his previous tenure.
It is worth mentioning that the rupee recorded the free-fall for the last 15 sessions. During this period the local currency depreciated by PKR 21.10 against the dollar from the interbank closing on September 01, 2022 at PKR 218.60. The local currency witnessed the historic low at PKR 239.94 to the dollar on July 28, 2022.
Currency experts said that the rupee was recovered because of contraction in current account deficit. Pakistan current account deficit recorded a contraction of 19 per cent during first two months (July – August) of the current fiscal year 2022/2023, according to data released by State Bank of Pakistan (SBP) a day earlier.
The current account deficit during the period under review was at $1.92 billion as compared with $2.37 billion in the corresponding months of the last fiscal year.
The rupee failed to get support from the latest announcement of the State Bank of Pakistan (SBP) about the funds of Saudi Arabia.
Saudi Fund for Development (SFD) has confirmed rollover of $3 billion deposit maturing on December 05, 2022 for one year. Deposit is placed with SBP and is part of its forex reserves. This reflects continuing strong and special relationship between KSA and Pakistan, according to the SBP.
The rupee has witnessed a continuous depreciation against the greenback even after the inflows received from the International Monetary Fund (IMF).
The local currency recorded some recovery against the greenback after the IMF fund was transferred to the State Bank of Pakistan (SBP). However, the removal of sanction on import of luxury and non-essential items the rupee again started free fall.
The currency experts said that although the IMF inflows would help the further inflows under bilateral and multilateral sources. However, the devastation of floods has changed the economic environment scenario.
The torrential rains and flash floods have inflicted a loss of over $10 billion to Pakistan’s economy. The devastation will prompt the country to make imports in the coming days, especially for agriculture products.
The rupee also fell due to continuous depletion in foreign exchange reserves of the country.