KARACHI: Pakistani Rupee (PKR) witnessed a decline of 24 paisas against the dollar on Thursday to end at PKR 229.15 in the interbank foreign exchange market.
The exchange rate recorded a fall in 24 paisas in rupee value to end at PKR 229.15 to the dollar from previous day’s closing of PKR 228.91 in the interbank foreign exchange market.
Currency experts said that mounting demand for dollars had pressured the local currency. Besides, falling inflows under exports and remittances also resulted in devaluation of the rupee.
READ MORE: PKR falls 25 paisas against dollar on easing export earnings
A day earlier, the State Bank of Pakistan (SBP) issued details of current account deficit (CAD) for the first half of the current fiscal year.
The CAD has contracted by 60 per cent to $3.66 billion in the first half (July – December) of fiscal year 2022-2023. The current account deficit was $9.09 billion in the same half of the last fiscal year.
Contraction in current account deficit may be attributed to massive decline in import bill of the country during the period under review. The import bill plunged by 23 per cent to $31.38 billion during the first half of the current fiscal year as compared with $40.56 billion in the corresponding half of the last fiscal year, according to Pakistan Bureau of Statistics (PBS).
READ MORE: Dollar advances to PKR 228.66 in interbank foreign exchange market
However, the exports also exhibited a decline of 6 per cent to $14.25 billion during the half under review as compared with $15.13 billion in the same half of the preceding fiscal year.
The massive decline in import bills sharply narrowed the trade deficit during the period under review. The trade deficit narrowed by 33 per cent to $17.13 billion during July – December of fiscal year 2022-2023 when compared with the deficit of $25.44 billion in the corresponding period of the last fiscal year.
On the other hand, the inflow of workers remittances declined by 11 per cent in first half (July – December) of fiscal year 2022-2023.
The SBP received $14.05 billion during first half of the current fiscal year as compared with inflow of $15.81 billion in the corresponding half of the last fiscal year.
READ MORE: PKR falls 19 paisas to dollar on falling forex reserves
On the other hand the official foreign exchange reserves of the country also fell significantly. The foreign exchange reserves of the country sharply declined. Official foreign exchange reserves of SBP fell to only $4.34 billion by the week ended January 06, 2023. The SBP’s reserves fell by $1.233 billion from the level of $5.576 billion a week ago i.e. December 30, 2022.
The present level of the official reserves have fallen below one month import cover. The import bill of the country for the month of December 2022 was recorded at $5.16 billion, according to Pakistan Bureau of Statistics (PBS).
The benchmark foreign exchange reserves of a central bank should be at a level to provide three months import cover.
READ MORE: Rupee ends firmer despite sharp decline in foreign exchange reserves
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 dropped by $16.803 billion.
The total foreign exchange of the country also fell by $1.234 billion to $10.188 billion by the week ended January 06, 2023 as compared with $11.422 billion a week ago.
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 $17.04 billion.
