KARACHI, February 11, 2022 – The US dollar extended its losses against the Pakistani Rupee (PKR) on Friday, marking a retreat in the interbank foreign exchange market.
The closing rate stood at Rs174.71 to the dollar, down from the previous day’s closing rate of Rs174.87. This decline in the dollar’s value was attributed to significant foreign exchange inflows, boosted by funds from a foreign lending agency and the sale of Islamic bonds.
Currency experts noted that the PKR gained ground due to a substantial increase in foreign exchange reserves. Pakistan’s foreign exchange reserves saw a notable rise of $1.65 billion, reaching $23.72 billion for the week ending February 04, 2022, compared to $22.084 billion in the previous week ending January 28, 2022. The State Bank of Pakistan (SBP) credited this increase to inflows of $1,053 million received from the International Monetary Fund (IMF) under the Extended Fund Facility (EFF) program and proceeds from the issuance of $1,000 million worth of Pakistan International Sukuk Bonds.
International factors, including the ease in global oil prices, were identified as additional contributors to the strengthening of the Pakistani rupee. As a net importer of petroleum products, Pakistan’s oil bill is directly impacted by fluctuations in international oil prices. The recent decline in oil prices globally has provided relief to the country, positively influencing its trade balance.
The oil import bill for the first half of the fiscal year 2021/2022 (July – December) recorded a significant increase of 113.40%, reaching $10.18 billion. This surge is compared to the oil import bill of $4.77 billion during the same period in the previous fiscal year. The ease in oil prices is seen as a mitigating factor against the economic challenges posed by a higher import bill, contributing to the overall positive sentiment in the foreign exchange market.
The dynamics of currency movements are intricately linked to various economic indicators, external inflows, and global market conditions. The recent appreciation of the Pakistani rupee against the US dollar reflects the impact of strategic financial moves, such as securing funds from international lending institutions and efficiently managing foreign exchange reserves.
While the retreat of the US dollar against the PKR is a positive development for Pakistan’s economy, stakeholders and investors are advised to stay vigilant and consider various factors influencing currency markets. Economic resilience, prudent financial management, and proactive measures by the authorities are essential components in navigating the challenges of a dynamic global economy.
As Pakistan continues to balance its economic priorities and external obligations, maintaining a robust foreign exchange position is crucial for sustaining economic stability and fostering growth. The positive trends observed in recent days underscore the importance of adaptive economic policies and effective utilization of international financial resources in achieving these objectives.
