KARACHI: Pakistani Rupee (PKR) crashed for the first time below PKR 275 against the dollar during intraday trading at interbank foreign exchange market on Friday.
The local currency lost PKR 3.64 to the dollar to reach historic low of PKR 275 to the dollar during the intraday trading from previous day’s closing of PKR 271.36 in interbank foreign exchange market.
READ MORE: Pakistani rupee falls to all-time low at PKR 271.36 against dollar
Currency experts believed that the dangerous low level of foreign exchange reserves and uncertainty over talks between the local authorities with the International Monetary Fund (IMF) further pressured the local currency.
The official reserves of the State Bank of Pakistan (SBP) declined by $592 million to $3.086 billion by week ended January 27, 2023 as compared with $3.678 billion a week ago.
READ MORE: Rupee declines again to dollar after a pause in free-fall
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 to provide import cover for three weeks. The import bill of the country for the month of January 2023 was recorded at $4.856 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.
READ MORE: Rupee recovers PKR 1.74 to dollar after witnessing massive fall in three sessions
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 $17.06 billion.
The foreign exchange reserves of the country recorded a decline of $711 million to $8.742 billion by week ended January 27, 2023 when compared with $9.453 billion by week ended January 20, 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 $18.486 billion.
READ MORE: Exchange rate adjustment continues; PKR makes new low against dollar
Besides, the IMF talks also in doldrums as reportedly the authorities were still reluctant to take tough decisions to continue loan program under Extended Fund Facility (EFF). It is important to note that the government already allowed flexibility in exchange rate and raised prices of petroleum products massively to comply with the IMF demands.