KARACHI: Pakistani Rupee (PKR) slipped by two paisas against the dollar on Friday amid higher demand for import and corporate payments.
The exchange rate recorded a decline of two paisas in the rupee value to end at PKR 227.14 to the dollar form previous day’s closing of PKR 227.12 in the interbank foreign exchange market.
READ MORE: Dollar jump to PKR 227.12 in interbank amid rising foreign payment
Currency dealers said that the local currency was under pressure due to high dollar demand for import and corporate payments.
State Bank of Pakistan (SBP) recently lifted the prior condition for opening the Letter of Credit (LC) by the banks for import proceeds.
The government imposed restrictions on opening of the LCs in May 2022 to control balance of payment and prevent outflow of the foreign currency.
Imports recorded 32 per cent decline to $5.16 billion in the month of December 2022 when compared with $7.58 billion in the same month of the last year, according to data released by Pakistan Bureau of Statistics (PBS).
READ MORE: Pakistani currency ends firmer to dollar amid falling import
Besides, sharp depletion in foreign exchange reserves and disruption in loan program under International Monetary Fund (IMF) also caused rupee devaluation.
Pakistan’s official foreign exchange reserves have fallen to an alarming level of $5.82 billion by week ended December 23, 2022 as compared with $6.116 billion a week ago i.e. December 16, 2022.
The present level of the official reserves have created default like situation as the country may unable to pay for foreign trade in coming days.
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The import bill of the country for the month of November 2022 was recorded at $5.18 billion, according to Pakistan Bureau of Statistics (PBS).
This shows the official foreign exchange reserves of the country have capacity to provide import cover for only 1.2 months. The benchmark foreign exchange reserves of a central bank should be at a level to provide three months import cover.
READ MORE: Rupee plunges by 27pc to dollar in year 2022
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 $14.324 billion.