KARACHI: Pakistani Rupee (PKR) plummeted against the US dollar on Friday owing to rising default credit risk on securities issued by the country.
The local currency fell by 50 paisas to PKR 223.17 to the dollar in the interbank foreign exchange market as compared with previous day’s closing of PKR 222.67 in the interbank foreign exchange market.
READ MORE: Rupee devaluation continues; dollar reaches PKR 222.67
The exchange rate recorded a fall in rupee value against the dollar for the sixth consecutive session.
Currency experts said that scarcity of foreign exchange and delay in pledged created panic in the market. The 5-year Credit Default Swap (CDS) increased to 80 per cent, which showed the foreign investors had lost faith in the securities issued by the country.
They said that falling foreign exchange reserves in these conditions further aggravated the situation.
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: Dollar climbs to PKR 222.41 amid foreign payment demand
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.
READ MORE: Dollar end up to PKR 221.91 in interbank on November 15, 2022
The central bank took various measures to monitor outflow of the foreign currency in order to stabilize the rupee value.
Currency experts said that the latest measures of the government to limit the cash dollar taking out of Pakistan supported the local currency to make gain.
READ MORE: Dollar extends gain to PKR amid falling foreign exchange reserves
On November 08, 2022, the SBP issued a circular to restrict the amount of foreign currency in cash up to equivalent to USD 5,000 from USD 10,000.
The central bank issued a circular stating that it had reviewed the existing foreign currency cash carrying limits for travel purposes, and decided to further rationalize the same.
