KARACHI: Pakistani Rupee (PKR) continued to devalue against the dollar on Thursday as the interbank foreign exchange market ended at PKR 224.37 to the foreign currency.
The exchange rate recorded a decline of 21 paisas in rupee value to end at PKR 224.37 to the dollar from previous day’s closing of PKR 224.16 in the interbank foreign exchange market.
Currency experts said that the central bank through strict monitoring and measures controlled the exchange rate otherwise the actual value was much higher.
They said that the exchange gap between open market and the interbank market is over 18-20 rupee.
Last day a former senior central banker at a private TV channel the SBP had not much stock of dollars to intervene into the market to support the local currency. However, the central bank is artificially controlling the exchange rate through regulatory measures and strict monitoring.
According to the experts, lack of foreign inflows through official channels was encouraging hawala and hundi and most of the senders were preferring informal channels to get higher rates for their greenbacks.
They said that falling foreign exchange and mounting scheduled repayment against foreign debt also escalated volatility in the foreign exchange market.
Last week the rupee showed resilience against the dollar due to rollover approval of $3 billion by the Saudi government.
However, recent payment of over a billion dollars against Sukuk by the government to international commercial investors also put pressure on the exchange rate.
The currency experts said that tightening of monetary policy and contraction in import payment demand helped the rupee to make recovery.
They said that the SBP should be more vigilant because latest efforts were not enough as Pakistan’s external sector was facing huge challenges.
Latest investment data revealed the foreign direct investment plunged by 52 per cent in first four months of the current fiscal year.
The current account deficit recorded a contraction in the first four months of the current fiscal year, but it swelled when compared with the previous month.
Pakistan needs foreign inflows on urgent basis to avoid balance of payment crisis. The foreign exchange reserves of Pakistan fell sharply during past few months making it difficult for the government to fulfill its foreign repayment commitments.
Official foreign exchange reserves of State Bank of Pakistan (SBP) have depleted by $327 million by week ended November 25, 2022 leaving import cover of only one and half months.
The official foreign exchange reserves of the SBP fell by $327 million to $7.499 billion by week ended November 25, 2022 as compared with $7.826 billion a week ago.
The import bill of the country was at $4.71 billion in October 2022, according to Pakistan Bureau of Statistics (PBS). According to the month import bill the existing foreign exchange reserves of the SBP have reduced to cover only 1.56 months import payment.
The central bank attributed the decline in official reserves to repayment against external debt.
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 $12.647 billion.
The total reserves of the country fell by $267 million to $13.378 billion by week ended November 25, 2022 as compared with $13.645 billion a week ago.
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 $13.850 billion.