KARACHI: The Pakistani Rupee (PKR) continued its falling journey against the dollar on Tuesday and fell to PKR 230.40 in interbank foreign exchange market.
The exchange rate recorded a decline of 15 paisas in rupee value to end at PKR 230.40 to the dollar from previous day’s closing of PKR 230.15 in the interbank foreign exchange.
Currency experts said that the rupee fell despite the central bank raised the benchmark policy rate to discourage demand.
The State Bank of Pakistan (SBP) a day earlier hiked the key policy rate by 100 basis points to 17 per cent in order to check the inflation.
A day earlier, the SBP also allowed one-time relaxation to remove restrictions on opening of Letter of Credit (LCs) escalated the demand for the greenback.
The experts said that stalled IMF program has also adversely affected the exchange rate.
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 the flexible exchange rate.
The State Bank of Pakistan (SBP) recently issued details of current account deficit (CAD) for the first half of the current fiscal year.
The CAD has contracted by 60 per cent to $3.66 billion in the first half (July – December) of fiscal year 2022-2023. The current account deficit was $9.09 billion in the same half of the last fiscal year.
Contraction in current account deficit may be attributed to massive decline in import bill of the country during the period under review.
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).
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.
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.
Meanwhile, the foreign exchange reserves of the country’s total foreign exchange reserves inched up by $256 million by week ended January 13, 2023.
The foreign exchange reserves of the country increased to $10.444 billion by week ended January 13, 2023 as compared with $10.188 billion a week ago i.e. January 06, 2023.
The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $16.784 billion.
Official foreign exchange reserves of the SBP also increased by $258 million to $4.601 billion by week ended January 13, 2022 as compared with $4.343 billion a week ago.
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.
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 $15.545 billion.