KARACHI: Pakistani Rupee (PKR) fell to new all-time low against the dollar on Thursday and ended at PKR 271.36 in the interbank foreign exchange market.
The exchange rate recorded a decline of PKR 2.53 in rupee value to end at PKR 271.36 from previous day’s closing of PKR 268.83 in the interbank foreign exchange market.
READ MORE: Rupee declines again to dollar after a pause in free-fall
The local currency previous recorded the historic low of PKR 269.63 to the dollar on January 30, 2023.
The local currency fall sharply in three sessions on January 26, 27 and 30, 2023. The rupee fell by PKR 38.74 or 16.77 per cent to PKR 269.63, the lowest level against the dollar.
Currency experts said that the market witnessed adjustment during the day. Falling foreign exchange reserves remained a big concern for the rupee stability.
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.
READ MORE: Rupee recovers PKR 1.74 to dollar after witnessing massive fall in three sessions
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.
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).
READ MORE: Exchange rate adjustment continues; PKR makes new low against dollar
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 the 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.
READ MORE: Pakistani rupee crashes against dollar, makes new interbank low at PKR 262.60
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.
