KARACHI: Pakistani Rupee (PKR) showed resilience against the dollar to end at PKR 277.87 on Monday amid high import payment demand.
The exchange rate recorded a gain of five paisas in rupee value to end at PKR 277.87 to the dollar from previous day’s closing of PKR 277.92 in the interbank foreign exchange market.
READ MORE: Rupee inches up against dollar to end at PKR 277.92
Currency experts said that the market witnessed higher dollar demand for import payments. However, they said that encouraging economic scenario helped the rupee to show resilience against the dollar.
The Finance Minister, Ishaq Dar in a tweet last week stated that ICBC has approved the rollover of $1.3 billion facility, which will be disbursed in three instalments.
The inflows of dollars from Chinese loan will eventually help the local currency to stabilize and strengthen against dollar.
The local currency recorded a massive decline following a rating agency downgraded the country’s currency rating.
Moody’s Investors Service downgraded the Government of Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa3 from Caa1.
READ MORE: Pakistani rupee witnesses highly volatile week, uncertainty to continue
Moody’s has also downgraded the rating for the senior unsecured MTN program to Caa3 from Caa1. Concurrently, Moody’s has also changed the outlook to stable from negative.
The decision to downgrade the ratings is driven by Moody’s assessment that Pakistan’s increasingly fragile liquidity and external position significantly raises default risks to a level consistent with a Caa3 rating.
In particular, the country’s foreign exchange reserves have fallen to extremely low levels, far lower than necessary to cover its imports needs and external debt obligations over the immediate and medium term.
The local currency recorded an all-time low of PKR 285.09 to the dollar on March 02, 2023.
Total foreign exchange reserves of the country improved by $542 million to $9.268 billion by the week ended February 24, 2023. The total foreign exchange reserves of the country were $8.726 billion a week ago i.e. February 17, 2023.
READ MORE: Rupee makes historic low against dollar at PKR 285.09
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 $17.96 billion.
The official foreign exchange reserves of the central bank also increased by $556 million to $3.814 billion by the week ended February 24, 2023 as compared with $3.258 billion a week ago.
The central bank attributed the improvement in the foreign exchange reserves to inflows of $700 million from China.
READ MORE; Rupee plunges by PKR 4.61 to dollar on rating downgrade
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 $16.332 billion.
