Rupee fails to maintain recovery; dollar gains to PKR 223.81

Rupee fails to maintain recovery; dollar gains to PKR 223.81

KARACHI: Pakistani Rupee (PKR) failed to maintain recovery against the US dollar on Wednesday as the interbank foreign exchange market ended at PKR 223.81 to the dollar.

The exchange rate recorded a decline of 39 paisas to end at PKR 223.81 to the dollar from previous day’s closing of PKR 223.42 in the interbank foreign exchange market.

READ MORE: Rupee beats dollar after seven sessions to end at PKR 223.42

A day earlier, the local currency recovered 24 paisas to the dollar after making a losing streak for seven consecutive sessions.

Currency experts said that the rupee was under immense pressure due to higher dollar demand for import and corporate payments.

Besides, lack of inflows and foreign investment also made it difficult to the government to meet foreign payment obligations.

READ MORE: Dollar rises for 7th straight session, reaches to PKR 223.66

Previously, the five-year Credit Default Swap (CDS) of the country reached to record high of 92 showing inability of the government to repay its debts.

Although last Saturday, Finance Minister Ishaq Dar assured the foreign investors that Pakistan would manage to repay its obligations in-time.

Latest investment data released by the State Bank of Pakistan (SBP) revealed the foreign direct investment plunged by 52 per cent in first four months of the current fiscal year.

The current account deficit recorded contraction in the first four months of the current fiscal year it swelled when compared with the previous month.

READ MORE: Rupee plummets on mounting default risk; dollar advances to PKR 223.17

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.

Foreign exchange (forex) reserves of Pakistan were at $13.796 billion by week ended November 11, 2022 as compared with $13.721 billion a week ago i.e. November 04, 2022.

READ MORE: Rupee devaluation continues; dollar reaches PKR 222.67

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 $13.432 billion.

The official foreign exchange reserves of the State Bank nominally increased by $3 million to 7.96 billion by week ended November 11, 2022 as compared with $7.957 billion a week ago.

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 $12.185 billion.

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