Dollar plunges to Rs226.15 at interbank closing on August 4, 2022

KARACHI: The US dollar plunged to Rs226.15 against the Pakistani Rupee (PKR) on Thursday at the closing of the interbank foreign exchange market.

The exchange rate recorded an increase of Rs2.65 in rupee value to end at Rs226.15 to the dollar from the previous day’s closing of Rs228.80 in the interbank foreign exchange market.

The local unit recorded a massive recovery during the past five sessions, especially during the last two days. The rupee hit historic low of Rs239.94 to the dollar on July 28, 2022. However, since then the local currency recorded a gain of Rs13.79 against the greenback by end of trading on August 04, 2022.

Currency dealers attributed the rupee appreciation to tight monitoring of the State Bank of Pakistan (SBP).

The SBP initiated inspection against the exchange companies on August 01, 2022. On August 2, 2022, the SBP suspended the operations of four branches of two ECs (Galaxy Exchange Co and Al-Hameed International Money Exchange Co) for violation of SBP regulations.

The central bank also imposed monetary penalties on some ECs in the recent past. Besides, due to violations of SBP instructions, arrangements of 13 franchises have been terminated by six different ECs in the recent past.

The currency experts said that the rupee was also supported by reduction in trade deficit during the first month of the current fiscal year.

The trade deficit narrowed by 18.33 per cent to $2.62 billion for the month of July 2022 as compared with the deficit of $3.23 billion in the same month of the last year.

The trade deficit was mainly contracted due to 12.8 per cent decline in import bill during the month under review. The import bill of the country was reduced to $4.86 billion in July 2022 as compared with $5.57 billion in the same month of the last year.

The experts, however, expressed concerns over massive decline in foreign exchange reserves. They said that expected inflows from the International Monetary Fund (IMF) would help the country’s external sector.

They further said that the flow of IMF fund would also open doors to other bilateral and multilateral funding for Pakistan.