KARACHI: The Pakistan Rupee (PKR) slipped to new historic low at Rs211.93 against dollar on Wednesday in interbank foreign exchange market.
The rupee fell by 45 paisas to end at Rs211.93 to the dollar from previous day’s closing of Rs211.48 in the interbank foreign exchange market.
READ MORE: Free-fall in rupee continues; dollar peaks at Rs211.48
Currency experts said that the local unit was under pressure due to fiscal weakness and falling foreign exchange reserves.
They said that the foreign exchange reserves had declined to critically low, which created panic in the market. Besides, high oil prices and rise in commodity prices globally also pushed dollar demand for import payments.
According to data released by the State Bank of Pakistan (SBP) a day earlier, the official reserves of the central bank had declined to provide about one month import cover.
READ MORE: Dollar hits historic high against rupee, ends near Rs210
The official foreign exchange reserves of the State Bank of Pakistan (SBP) fell by $241 million to $8.985 billion by week ended June 10, 2022 as compared with $9.226 billion a week ago i.e. June 03, 2022.
The present level of the SBP’s reserves showed that the central bank has import cover for around only one months.
Pakistan’s import bill for the month of May 2022 recorded at $6.777 billion, according to Pakistan Bureau of Statistics (PBS).
READ MORE: Rupee collapses to fresh low against dollar to Rs208.75
The latest foreign exchange reserves of the SBP showed it fell around 2½ years low. Previously, the foreign exchange reserves held by the central bank were seen at $9.233 billion on December 6, 2019.
The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021.
Since touching the peak the central bank’s foreign exchange witnessed a continuous decline. The official reserves of the SBP fell around $11.16 billion by week ended June 10, 2022 from touching the peak on August 27, 2021.
The country is facing serious balance of payment crisis during the past many months. The foreign exchange reserves of the central bank have seen a constant decline.
The country was expecting inflows from various sources but so far those were not materialized so far. The country also making all efforts to resume IMF program to obtain about $ 1 billion next tranche under Extended Fund Facility (EFF).
READ MORE: Pakistan’s central bank reserves shrink to one month import cover
It is pertinent to mention that the government had twice increased the prices of petroleum products since May 26, 2022 in order to satisfy the International Monetary Fund (IMF) for the release of next tranche of about $1 billion. Another increase was seen on June 15, 2022.
The government on May 26, 2022 decided partially withdraw the subsidy to get the next tranche of the IMF, the rupee sharply made gains against the dollar. The local unit made a recovery of Rs4.42 against the dollar during the past five sessions.
The rupee remained under pressure against the greenback during the current fiscal year. The State Bank of Pakistan (SBP) has taken various measures to support balance of payment and the local currency. However, the measures ended in a failure to help the rupee to recover losses.
The SBP on May 23, 2022 announced a sharp increase in policy rate by 150 basis points to 13.75 per cent from 12.25 per cent.
Recently the government announced a complete ban on imports to support balance of payment and help the rupee to stabilize. But all these measures appeared in failure as the exchange rate yet again deteriorated today massively.