KARACHI: Pakistani Rupee (PKR) fell sharply on Tuesday against the US dollar to welcome New Year.
The exchange rate recorded a decline of 51 paisas in rupee value to end at PKR 226.94 to the dollar from the previous closing of PKR 226.43 to the dollar on December 30, 2022 in the interbank foreign exchange market.
It was the first trading in the foreign currency market for the 2023 as a day earlier the banks observed holiday.
READ MORE: Rupee plunges by 27pc to dollar in year 2022
Currency experts said that the local currency was under immense pressure due to mounting demand of dollar for import and corporate payment.
They said that fast depletion in foreign exchange reserves had resulted in massive devaluation in rupee value.
The PKR plunged by 27 per cent or PKR 48.26 to the dollar during the year 2022.
READ MORE: Dollar rises to PKR 226.41 as demand jumps for import, corporate payments
The exchange rate ended at PKR 226.43 to the dollar on Friday, the last trading day of year 2022 at the interbank foreign exchange market. The exchange rate started the year at PKR 178.17 to the dollar.
The rupee witnessed upheaval during the year due to political and economic uncertainties. During the year the rupee fell to record low of PKR 239.94 to the dollar on July 28, 2022.
The fall in the local currency during the year may be attributed to scarcity of dollars and tight schedule of foreign repayments. Besides, sharp depletion in foreign exchange reserves and disruption in loan program under International Monetary Fund (IMF) also caused rupee devaluation.
READ MORE: Rupee further weakens to dollar as SBP lifts ban on imports
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.
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).
READ MORE: Rupee free fall continues; dollar hits PKR 226.15 in interbank
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.
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.