KARACHI: Pakistani Rupee (PKR) plummeted to the dollar on Friday to make historic low at PKR 276.58 at closing of interbank foreign exchange market.
The rupee fell by PKR 5.22 to end at PKR 276.58 to the dollar from previous day’s closing of PKR 271.36 in the interbank foreign exchange market.
Currency experts believed that the dangerous low level of foreign exchange reserves and uncertainty over talks between the local authorities with the International Monetary Fund (IMF) further pressured the local currency.
The official reserves of the State Bank of Pakistan (SBP) declined by $592 million to $3.086 billion by week ended January 27, 2023 as compared with $3.678 billion a week ago.
The SBP said that the decline in foreign exchange reserves were due to scheduled external repayment.
The present level of the official reserves have fallen to provide import cover for three weeks. The import bill of the country for the month of January 2023 was recorded at $4.856 billion, according to 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.
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 $17.06 billion.
The foreign exchange reserves of the country recorded a decline of $711 million to $8.742 billion by week ended January 27, 2023 when compared with $9.453 billion by week ended January 20, 2023.
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 $18.486 billion.
Besides, the IMF talks also in doldrums as reportedly the authorities were still reluctant to take tough decisions to continue loan program under Extended Fund Facility (EFF).
It is important to note that the government already allowed flexibility in exchange rate and raised prices of petroleum products massively to comply with the IMF demands.