KARACHI: Pakistani Rupee (PKR) fell by Rs1.58 against the dollar on Tuesday due to higher foreign currency demand for import, corporate payments.
The exchange rate recorded a fall of Rs1.58 in rupee value to end at PKR 261.50 to the dollar from previous day’s closing of PKR 259.92 in the interbank foreign exchange market.
READ MORE: Dollar eases by seven paisas to Pakistani rupee in interbank
Currency experts said that dollar demand was seen during the day for import and corporate payments.
The local currency recorded a historic low of Rs276.58 to the dollar on February 03, 2023. However, after touching the lowest level the local currency recovered Rs15.08 to the dollar till the end of market on February 28, 2023.
The rupee is making recovery due to IMF conditions that have been met by the local authorities for obtaining a tranche of $1.2 billion under Extended Fund Facility (EFF).
READ MORE: Rupee outperforms dollar to reach PKR 259.99 in interbank market
The country is hoping to finalize the staff level agreement by this week, which will make it possible for the release of the tranche.
In order to meet IMF conditions, the government announced a phenomenal increase in prices of electricity, gas and petroleum products. Besides, the government also announced a mini budget for generating additional revenue of Rs170 billion.
The country’s foreign exchange reserves depleted sharply during the past one year and presently at an alarming level. However, in the past two weeks the official reserves slightly increased, giving some breathing room to the local currency.
READ MORE: Rupee ends at PKR 260.93 to dollar in interbank forex market
The official foreign exchange reserves of the State Bank of Pakistan (SBP) increased by $65 million to $3.258 billion by the week ended February 17, 2023 as compared with $3.193 billion a week ago.
The current level of the official foreign exchange reserves are only to provide import cover for about two weeks or 19 days.
The import bill for the month of January 2023 has been recorded at $4.856 billion, as per 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: Interbank market ends at PKR 261.90 to dollar as rupee makes recovery
The official foreign exchange reserves of SBP fell sharply to an almost nine-year low. Previously, the official reserves of the SBP were seen at this level at $3.19 billion in February 2014.
