KARACHI: The US dollar retreated against the Pakistan Rupee (PKR) on Thursday after the country entered in a deal of $2.3 billion, which is likely to be transferred in a day.
The rupee gained Rs4.70 to end at Rs207.23 to the dollar from previous day’s closing at Rs211.93 in interbank foreign exchange market.
The rupee made the latest record low of Rs211.93 on June 22, 2022.
Currency experts said that Pakistan would get an amount of $2.3 billion as the country and Chinese consortium banks finalized an agreement in this regard.
Besides, the market also responded positively to expected deal between Pakistan and the IMF as the government authorities had agreed to many tough conditions, including revision of the federal budget targets.
They said that the foreign exchange reserves had declined to critically low, which created panic in the market. Besides, high oil prices and rise in commodity prices globally also pushed dollar demand for import payments.
According to data released by the State Bank of Pakistan (SBP) a day earlier, the official reserves of the central bank had declined to provide about one month import cover.
The official foreign exchange reserves of the State Bank of Pakistan (SBP) fell by $241 million to $8.985 billion by week ended June 10, 2022 as compared with $9.226 billion a week ago i.e. June 03, 2022.
The present level of the SBP’s reserves showed that the central bank has import cover for around only one months.
Pakistan’s import bill for the month of May 2022 recorded at $6.777 billion, according to Pakistan Bureau of Statistics (PBS).
The latest foreign exchange reserves of the SBP showed it fell around 2½ years low. Previously, the foreign exchange reserves held by the central bank were seen at $9.233 billion on December 6, 2019.
The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021.
Since touching the peak the central bank’s foreign exchange witnessed a continuous decline. The official reserves of the SBP fell around $11.16 billion by week ended June 10, 2022 from touching the peak on August 27, 2021.
The country is facing serious balance of payment crisis during the past many months. The foreign exchange reserves of the central bank have seen a constant decline.
The rupee remained under pressure against the greenback during the current fiscal year. The State Bank of Pakistan (SBP) has taken various measures to support balance of payment and the local currency. However, the measures ended in a failure to help the rupee to recover losses.
The SBP on May 23, 2022 announced a sharp increase in policy rate by 150 basis points to 13.75 per cent from 12.25 per cent.
Recently the government announced a complete ban on imports to support balance of payment and help the rupee to stabilize. But all these measures appeared in failure as the exchange rate yet again deteriorated today massively.