KARACHI: Free-fall in Pakistan Rupee (PKR) continued on Wednesday as the US dollar hit another record high of Rs206.46 in the interbank foreign exchange market.
The exchange rate witnessed a decline of Rs1.30 to end at Rs206.46 to the dollar from last day’s closing of Rs205.16, the previous record low of the rupee, in the interbank foreign exchange market.
Analysts said that surge in international oil prices and massive decline in foreign exchange reserves had escalated the dollar demand.
The official foreign exchange reserves of the State Bank of Pakistan (SBP) have fallen by $497 million to $9.226 billion by week ended June 03, 2022 as compared with $9.723 billion a week ago i.e. May 27, 2022.
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 the 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 $10.92 billion by the week ended June 03, 2022 from touching the peak.
Overall the foreign exchange reserves of the country declined by $595 million to $15.176 billion by the week ended June 03, 2022 as compared with $15.771 billion a week ago.
They said that usually import payments are high in the last month of a fiscal year, especially for oil imports.
It is pertinent to mention that the government had twice increased the prices of petroleum products since May 26, 2022 in order to satisfy the International Monetary Fund (IMF) for the release of next tranche of about $1 billion.
Although the since announcement of raising petroleum prices the rupee witnessed a recovery. However, the falling foreign exchange reserves of the central bank once again put pressure on the local unit.
The government on May 26, 2022 decided partially withdraw the subsidy to get the next tranche of the IMF, the rupee sharply made gains against the dollar. The local unit made a recovery of Rs4.42 against the dollar during the past five sessions.
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. However, these measures appeared in failure as the exchange rate yet again deteriorated today massively.