KARACHI: Pakistan’s national currency ended the week on a bearish note on Friday by crossing a crucial psychological barrier to close at Rs178.04 against the US dollar as the country reported a fall in its foreign exchange reserves amid import payment pressure, said analysts and traders.
The Pakistani rupee hit another all-time low against the greenback as the country’s foreign exchange reserves declined by $90 million to $18.57 billion during the week ending on December 10, compared to $18.66 billion the week before that.
The foreign reserves held by commercial banks stood at $6.46 billion, said the central bank on Thursday.
“There is already pressure on the Pak rupee due to increasing demand for the US dollar for import payments,” Abdul Azeem, head of research at Spectrum Securities, told Arab News. “The fall in the currency reserves also played a role in the closing of the rupee at the record low level.”
On Friday, the rupee in the interbank market lost its valued by 0.03 percent to close at Rs178.04 against the greenback as compared to a flat close on Thursday.
The rupee in the open market was also trading at Rs181.50 for selling and Rs180.50 for buying on Friday, according to the Exchange Companies Association of Pakistan.
The rupee has remained under pressure since May and lost 17 percent of its value due to higher outflows of dollars due to import payments. Since the beginning of the fiscal year, the dollar at the interbank market increased in terms of its value in Pakistan by 13 percent and went up by 15 percent in the open market.
Pakistan’s trade deficit increased by 112 percent to $20.6 billion during the July-November 2021 period of the current fiscal year. The country’s import bill for the month of November increased to $7.8 billion, according to the Pakistan Bureau of Statistics (PBS).
The Pakistani rupee is also under pressure due to the lack of inflows as the country strives to restore the $6 billion loan program offered by the International Monetary Fund (IMF). The fund signed a staff level agreement for the revival of the program which needs to be approved by its executive board by mid-January.
“The government has decided to present a supplementary budget in parliament to fulfil the IMF conditions and ensure the executive board approval,” Samiullah Tariq, director research at the Pakistan-Kuwait Investment, told Arab News.
“The revival of the IMF program and impact of the central bank’s monetary policy to cool down the economy will likely ease some pressure on the Pak rupee,” he added.
Analysts said the rupee would appreciate to about Rs170 against the dollar during the coming year.
“I think the rupee will recover its lost ground and hover within a range of Rs168 and Rs170 against the dollar by the end of the current fiscal year,” Adil Jilani, analyst at Trust Securities & Brokerage, told Arab News.
“The revival of the IMF program, exports and remittances resilience, adequate external financing, reserves at comfortable level, and slowdown in economic activities will play a crucial role in the rupee appreciation,” he added.
