KARACHI: The Pakistani Rupee (PKR) fell sharply by Rs2.19 to Rs210.10 against the US dollar in the interabnk foreign exchange market on Wednesday owing to high demand for import payments and uncertainty over IMF loan program.
The exchange rate ended recorded a decline in rupee value of Rs2.19 to end at Rs210.10 to the dollar from previous closing of Rs207.91 on July 07, 2022, in the interbank foreign exchange market.
The foreign exchange market was opened after five days long Eid holidays, which resulted in high dollar demand for import and corporate payments.
Further, the uncertainty over IMF loan program has also created panic in the market.
The rupee has recorded all-time low at Rs211.92 on June 22, 2022.
Currency experts said that falling foreign exchange reserves were also major reason for the rupee depreciation.
The foreign exchange reserves of Pakistan have depleted by $454 million to $15.742 billion by week ended June 30, 2022. The foreign exchange reserves of the country were at $16.196 billion a week ago i.e. June 24, 2022.
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 $11.486 billion.
The official reserves of the State Bank also recorded a decline of $493 million to $9.816 billion by week ended June 30, 2022 as compared with $10.309 billion a week ago.
The central bank attributed the decline in foreign exchange reserves to external debt repayments.
It is pertinent to mention that the SBP received about $2.3 billion from Chinese banks for buildup of foreign exchange reserves. However, despite receiving the amount the external debt payment kept the pressure on the reserves.
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 declined by $10.33 billion.
The SBP on July 07, 2022 announced a hike of 125 basis points in policy rate to bring at 15 per cent. The purpose of increasing the interest rate was to curb the demand and support the rupee value.
However, the effort of the SBP failed to support the rupee value.