Rupee plummets by PKR 2.32 against dollar amid inflow constraints

Rupee plummets by PKR 2.32 against dollar amid inflow constraints

KARACHI: Pakistani rupee (PKR) plummeted by PKR 2.32 against the dollar on Monday owing to constraints in inflow of the foreign currency.

Exchange rate ended witnessed a decline of PKR 2.32 in rupee value to end at PKR 284.03 to the dollar from last Friday’s closing of PKR 281.71 in interbank foreign exchange market.

READ MORE: Rupee strengthens against dollar to PKR 281.71 as forex reserves improve

Currency experts said that the higher dollar demand for import and corporate payments pressured the rupee value. Besides, the lack of inflows of the greenback also resulted in depreciation of the local currency.

Exports have decreased by 8.65 per cent to $18.79 billion during first eight months (July – February) of the current fiscal year when compared with $20.57 billion in the corresponding period of the last fiscal year.

Meanwhile, inflows of workers’ remittances recorded a decline of 11 per cent in eight months (July – February) of fiscal year 2022-2023.

READ MORE: Rupee inches up by 43 paisas in interbank forex market

The overseas Pakistani workers sent $17.99 billion during first eight months of the current fiscal year as compared with $20.18 billion in the corresponding months of the last fiscal year.

The local unit is facing a continuous pressure since past few years due to challenges to the economy and uncertain political conditions.

The rupee hit the all-time low of PKR 285.09 on March 02, 2023.

The decline in rupee value may also be attributed to depleting foreign exchange reserves.

Pakistan’s weekly foreign exchange reserves moved by $93 million by week ended March 10, 2023. The foreign exchange reserves of the country increased to $9.847 billion by week ended March 10, 2023 when compared with $9.754 billion a week ago i.e. March 03, 2023.

The country’s foreign exchange reserves hit an all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $17.381 billion.

READ MORE: PKR loses 56 paisas against dollar in interbank forex market

On the other hand, the official reserves of the SBP increased $18 million to $4.319 billion by week ended March 10, 2023 when compared with $4.301 billion a week ago.

Foreign exchange reserves of the SBP have been increased to a level for providing more than one month import cover.

After many week the official reserves of the central crossed one month import cover. The import bill of the country during the month of February 2023 was recorded at $4 billion.

READ MORE: Rupee registers another day of erosion; dollar ends at PKR 282.29

Ideally a central bank should have a level of foreign exchange reserves that is equal to three-month of import payment by a country.

The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by the week ended August 27, 2021. Since then the official reserves of the SBP dropped by $15.827 billion.