PKR registers nominal recovery against dollar in interbank

KARACHI: The Pakistani rupee (PKR) registered a marginal recovery of three paise against the US dollar on Tuesday, closing at PKR 283.55 against the dollar at the interbank forex market.

It was a marginal gain from the previous day’s close of PKR 283.58.

According to currency experts, there was reduced demand for the dollar for imports and other corporate payments, which might have contributed to the rupee’s marginal gain.

It is worth noting that the exchange rate had earlier strengthened against the dollar due to a significant contraction in the current account deficit.

Pakistan’s current account deficit narrowed by 313 per cent during the first eight months (July-February) 2022/2023, official data revealed a day earlier.

According to the State Bank of Pakistan (SBP), the current account deficit during the first eight months of the current fiscal stood at $3.86 billion, compared to a deficit of $12.08 billion in the corresponding period of the previous fiscal.

Experts said lack of inflows kept the rupee under pressure.

Exports declined by 8.65 per cent to $18.79 billion during the first eight months (July-February) of the current fiscal as compared to $20.57 billion in the same period last fiscal.

Meanwhile, in the eight months (July-February) of the financial year 2022-2023, the inflow of workers’ remittances registered an 11 per cent decline.

Overseas Pakistani workers remitted $17.99 billion during the first eight months of the current financial year as compared to $20.18 billion in the corresponding months of the previous financial year.

The local unit has been facing constant pressure over the past few years due to the challenges of the economy and the uncertain political situation.

Rupee touched an all time low of PKR 285.09 on March 02, 2023.

The fall in the value of rupee can also be attributed to the decrease in foreign exchange reserves.

Pakistan’s weekly forex reserves increased by $93 million for the week ending March 10, 2023. The country’s foreign exchange reserves increased to $9.847 billion for the week ended March 10, 2023, as against $9.754 billion a week ago i.e. March 03, 2023.

The country’s foreign exchange reserves reached an all-time high of $27.228 billion on August 27, 2021. Since then the forex reserves have declined by $17.381 billion.

On the other hand, the official reserves of SBP increased by $18 million to $4.319 billion for the week ended March 10, 2023 as compared to $4.301 billion a week ago.

SBP’s foreign exchange reserves have been increased to a level to provide import cover for more than one month.

After several weeks, the official reserves of the central government crossed the import cover of one month. The country’s import bill during the month of February 2023 was recorded at $4 billion.

Ideally a central bank should have a level of foreign exchange reserves equal to three months’ import payments by a country.

Foreign exchange reserves held by the central bank were seen at a record high of $20.146 billion for the week ended August 27, 2021. Since then the official reserves of the SBP decreased by $15.827 billion.