KARACHI: Pakistani Rupee (PKR) recorded a decline of 22 paisas against the US dollar on Monday owing to rising foreign currency demand for import and corporate payment.
The exchange rate ended at PKR 223.91 to the dollar from last Friday’s closing of PKR 223.69 in the interbank foreign exchange market.
READ MORE: PKR ends stable to dollar on $3 billion Saudi rollover
Currency experts said that the market witnessed higher dollar demand for import and corporate payments.
They said that corporate buyers were also seen active for purchasing dollar to make payment of dividends in the month of December.
Last week the rupee showed resilience against the dollar due to rollover approval of $3 billion by the Saudi government.
READ MORE: SBP foreign exchange reserves fall to $7.5 billion
The Saudi Fund for Development (SFD) extended the term for the deposit provided by the Kingdom of Saudi Arabia in the amount of $3 billion to the State Bank of Pakistan.
The extension of the term of the deposit is a continuation of the support provided by the government of the Kingdom of Saudi Arabia to the Islamic Republic of Pakistan, as the deposit aimed to shore up the foreign currency reserves in the Bank and help Pakistan in facing the economic repercussions of the COVID-19 pandemic; it, furthermore, contributed to meet external sector challenges and achieve sustainable economic growth for the country.
Currency experts said that tightening of monetary policy and contraction in import payment demand helped the rupee to make recovery.
READ MORE: Pakistan official reserves fall to around 1 ½ months import coverage
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.
READ MORE: Pakistan forex reserves inch up to $13.796 billion
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.
