KARACHI: Adjustment in exchange rate continued on Monday as the Pakistani Rupee (PKR) made new historic low against the US dollar.
The exchange rate recorded a decline of PKR 7.03 to end at PKR 269.63 against the dollar from last Friday’s closing of PKR 262.60 in interbank foreign exchange market.
The local currency fall sharply in last three sessions. The rupee fell by PKR 38.74 or 16.77 per cent during last three sessions.
Currency experts said that the IMF talks resumption and sharp decline in the foreign exchange reserves kept the rupee under pressure.
READ MORE: Pakistani rupee crashes against dollar, makes new interbank low at PKR 262.60
Country’s official foreign exchange reserves have plunged to only $3.68 billion by week ended January 20, 2023. The central bank said that its official reserves of the State Bank of Pakistan (SBP) declined by $923 million to $3.678 billion by week ended January 20, 2023 as compared with $4.601 billion a week ago or January 13, 2023.
The SBP said that the decline in foreign exchange reserves were due to scheduled external repayment.
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 plunges to historical low against dollar; ends at PKR 255.43 in interbank
The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP dropped by $16.468 billion.
Currency experts said that rupee fell after the government had agreed to the IMF to meet the conditions for continuation of loan program under Extended Fund Facility (EFF).
One of the conditions of the IMF was to allow flexible exchange rate based on decisions made by market forces.
Recently, a former finance minister had claimed that the government was controlling the exchange rate. The actual rate of the dollar is PKR 295, as the former finance minister claimed.
The government is seeking much needed IMF program for foreign inflows. However, a day earlier the government has shown intention to meet the conditions set by the IMF, which also included to let market decide exchange rate.
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: Rupee’s free-fall continues; dollar appreciates to PKR 230.89
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 bill 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.
READ MORE: No letup in rupee fall; dollar surges to PKR 230.40 in interbank
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.