Interbank market ends at PKR 261.90 to dollar as rupee makes recovery

KARACHI: Pakistani Rupee (PKR) made recovery of 61 paisas to end at PKR 261.90 to the dollar on Wednesday in interbank foreign exchange market.

The exchange rate recorded a gain of 61 paisas in rupee value to end at PKR 261.90 to the dollar from previous day’s closing of PKR 262.51 in the interbank foreign exchange market.

Currency experts said that the market was expecting successful discussions between local authorities and the IMF, which will help in release of tranche amounting $1.2 billion.

The experts further said that the approval of IMF tranche under Extended Fund Facility (EFF) would also open doors for inflows from other friendly countries.

The local currency recorded historic low of Rs276.58 to the dollar on February 03, 2023. However, after touching the lowest level the local currency recovered 5.3 per cent or Rs14.68 to the dollar till the end of market on February 22, 2023.

However, they said that the rupee was under pressure due to foreign payments under import and corporate demands.

The official foreign exchange reserves of the central bank were at $3.192 million by the week ended February 10, 2023 as compared with $2.917 billion a week ago. The current level of the official foreign exchange reserves are only to provide import cover for about two weeks or 19 days.

The import bill for the month of January 2023 has been recorded at $4.856 billion, as per 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.

The official foreign exchange reserves of SBP fell sharply to an almost nine-year low. Previously, the official reserves of the SBP were seen at this level at $3.19 billion in February 2014.

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 then the official reserves of the SBP dropped by $16.954 billion.

Currency experts said that the low level of foreign exchange reserves remained a threat for exchange rate stability in future.