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

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

KARACHI: Pakistani Rupee (PKR) registered another day of erosion against the US dollar on Tuesday and ended at PKR 282.29 in interbank foreign exchange market.

The local currency ended at PKR 281.61 to the dollar a day earlier in interbank foreign exchange market.

READ MORE: Rupee weakens against dollar to end at PKR 281.61 in interbank

Currency experts said that although the government is claiming to have standby staff level (SLA) with the International Monetary Fund (IMF) in next 48 hours. However, market is remained shaky about the government claims.

On the other hand, the dollar demand for import payment witnessed a steel rise ahead of holy month of Ramaza. The Islamic month is scheduled to start on March 23, 2023 (subject to sight of moon) and demand for commodities related to Iftar and Sehar rose sharply.

READ MORE: Rupee strengthens against dollar to reach PKR 280.77 in interbank

Furthermore, uncertain political and economic environment also hampered the rupee stability. The experts said that prolonged delay in IMF loan program frustrated the investors and market participants.

The rupee recorded historic low of PKR 285.09 to the dollar on March 02, 2023.

Previously, the local currency had seen improvement in value due to rising foreign exchange reserves. The experts however said that the foreign exchange reserves were still very low.

READ MORE: Rupee witnesses big fall against dollar to end PKR 282.30 in interbank

Foreign exchange reserves of the State Bank of Pakistan (SBP) have been increased to a level for providing more than one month import cover, according to official data released last week.

The official reserves of the SBP increased by $487 million to $4.301 billion by week ended March 03, 2023 as compared with $3.814 billion a week ago i.e. February 24, 2023.

The SBP attributed the rise in its official reserves to inflows of $500 million as commercial loan from China.

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: Dollar jumps to PKR 279.12 in interbank foreign exchange market

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 $15.845 billion.