KARACHI: Pakistani Rupee (PKR) plunged to historical low against the dollar on Thursday as the exchange rate ended PKR 255.43 in the interbank foreign exchange market.
The rupee also made historical single day loss against the dollar of Rs24.54.
Analysts said that the last major movement in the parity in a single day was witnessed in October 2018 whereby the SBP let slip the PKR against the dollar by 7.01 per cent DoD to settle at 133.64.
Previously, the rupee fell to the historic low at Rs239.94 at interbank closing on July 28, 2022.
Currency experts said that rupee fell after the government had agreed to the IMF to meet the conditions for continuation of loan program under Extended Fund Facility (EFF).
READ MORE: Rupee’s free-fall continues; dollar appreciates to PKR 230.89
One of the conditions of the IMF was to allow flexible exchange rate based on decisions made by market forces.
Recently, a former finance minister had claimed that the government was controlling the exchange rate. The actual rate of the dollar is PKR 295, as the former finance minister claimed.
The rupee recorded the historic low of PKR 239.94 to the dollar at interbank closing on July 28, 2022.
The government is seeking much needed IMF program for foreign inflows. However, a day earlier the government has shown intention to meet the conditions set by the IMF, which also included to let market decide exchange rate.
READ MORE: No letup in rupee fall; dollar surges to PKR 230.40 in interbank
The State Bank of Pakistan (SBP) recently issued details of current account deficit (CAD) for the first half of the current fiscal year.
The CAD has contracted by 60 per cent to $3.66 billion in the first half (July – December) of fiscal year 2022-2023. The current account deficit was $9.09 billion in the same half of the last fiscal year.
Contraction in current account deficit may be attributed to massive decline in import bill of the country during the period under review.
The import bill plunged by 23 per cent to $31.38 billion during the first half of the current fiscal year as compared with $40.56 billion in the corresponding half of the last fiscal year, according to Pakistan Bureau of Statistics (PBS).
However, the exports also exhibited a decline of 6 per cent to $14.25 billion during the half under review as compared with $15.13 billion in the same half of the preceding fiscal year.
The massive decline in import bill sharply narrowed the trade deficit during the period under review. The trade deficit narrowed by 33 per cent to $17.13 billion during July – December of fiscal year 2022-2023 when compared with the deficit of $25.44 billion in the corresponding period of the last fiscal year.
On the other hand, the inflow of workers remittances declined by 11 per cent in first half (July – December) of fiscal year 2022-2023.
READ MORE: Dollar crosses PKR 230 in interbank foreign exchange
The SBP received $14.05 billion during first half of the current fiscal year as compared with inflow of $15.81 billion in the corresponding half of the last fiscal year.
Meanwhile, the foreign exchange reserves of the country’s total foreign exchange reserves inched up by $256 million by week ended January 13, 2023.
The foreign exchange reserves of the country increased to $10.444 billion by week ended January 13, 2023 as compared with $10.188 billion a week ago i.e. January 06, 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 $16.784 billion.
Official foreign exchange reserves of the SBP also increased by $258 million to $4.601 billion by week ended January 13, 2022 as compared with $4.343 billion a week ago. The present level of the official reserves have fallen below one month import cover.
READ MORE: Dollar soars to PKR 229.67 on mounting import payment demand
The import bill of the country for the month of December 2022 was recorded at $5.16 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 $15.545 billion.
