KARACHI: The Pakistan Rupee (PKR) continued recovery against the US dollar for third consecutive day on Tuesday on rumors further increase in petroleum prices for ensuring release of next IMF tranche.
The exchange rate ended with a gain of 60 paisas in rupee value to end at Rs198.46 to the dollar from previous day’s closing of Rs199.06 in the interbank foreign exchange market.
READ MORE: Rupee recovers 70 paisas against dollar in interbank
The rupee high all-time low of Rs202.01 to the dollar on May 26, 2022.
On the same day, the government decided to withdraw a portion of subsidy and announced a sharp increase of Rs30 per liter in prices of each petroleum products.
The market is expecting the government decision would pave way for release of tranche under Extended Fund Facility (EFF) by the International Monetary Fund (IMF).
However, after the decision to increase the prices of petroleum products the rupee recovered Rs3.55 to the dollar in next three sessions.
READ MORE: Rupee ends month-long losing streak; dollar at Rs199.76
The market sources said that the rupee remained in recovery mode due to rumors of further increase in prices of petroleum products.
The exchange rate was at Rs185.63 on April 29, 2022 and since then the local unit continued its free fall to reach at the historic level of Rs202.01 to the dollar on May 26, 2022.
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.
READ MORE: Rupee makes historic low at Rs202 against dollar
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 to impose a complete ban on imports to support balance of payment and help rupee to stable. However, these measures appeared in failure as the exchange rate yet again deteriorated today massively.
Currency experts said that massive fall in foreign exchange reserves and high import payments were the major reasons behind rupee fall.
Pakistan’s foreign exchange (forex) reserves eased to $16.15 billion by week ended May 20, 2022. The foreign exchange reserves were at $16.161 billion a week ago i.e. May 13, 2022. The country’s foreign exchange reserves hit record high at $27.228 billion by week ended August 27, 2021. Since then the foreign exchange reserves have depleted by $11.078 billion.
The official reserves of the State Bank witnessed a decline of $178 million to $10.089 billion by week ended May 20, 2022 as compared with $10.164 billion a week ago. The SBP reserves reached to record high at $20.145 billion by August 27, 2021. The official reserves also fell by $10.056 billion after reaching record high. The official reserves of the SBP have been reduced to provide import payment cover for only 1 ½ months.
READ MORE: Dollar continues record-breaking journey to reach Rs201.92
The import bill of the country surged by 46.41 per cent to $65.49 billion during the first 10 months of the current fiscal year as compared with $44.73 billion in the corresponding months of the last fiscal year.
Pakistan is a net importer of petroleum products to meet its domestic demand. The country’s energy bill was $17.03 billion during the first nine 10 months (July – April) 2021/2022 as compared with $8.69 billion in the corresponding period of the last fiscal year, showing a massive growth of 96 per cent. The oil bill is around 25 per cent of the total import bill of the country.
READ MORE: Dollar hits record high at Rs201.41 despite monetary tightening
