Pakistani rupee maintained its fast losing streak against the US dollar on Tuesday and depreciated to 188.66, an all-time low in the inter-bank market.
The rupee’s weakest closing prior to this was 188.18 on April 7, 2022. The State Bank of Pakistan said in a statement that the rupee opened at 187.53 against the US dollar in the interbank market and closed at 188.66 after shedding Rs1.13 (-0.60 percent). Within the open market, the rupee was traded at 189/190 per dollar against 187.50/188.50 a dollar a day earlier.
The rupee has shed Rs2.97 against the US dollar during the last three sessions. Overall, the rupee has depreciated by Rs31.17 against the US dollar during the ongoing fiscal year 2021-22 and Rs12.15 during the current year 2022.
Lack of clarity on foreign exchange inflow and a stronger US dollar pushed the rupee to it’s all-time low in the inter-bank market. Pakistan is currently relying on inflow under its Extended Fund Facility (EFF) of the International Monetary Fund (IMF), hoping to convince the lender of releasing its next tranche to boost foreign currency reserves. Pakistani authorities and IMF team will resume discussions over policies for completing the seventh review in Doha next week. Traders and markets are looking at the IMF as progress with the Fund instils investor confidence in the economy, stabilises Pakistan’s foreign exchange reserves, and unlocks funding from other international financial institutions.
Moreover, a widening trade deficit has put pressure on the country’s foreign exchange reserves as well, with the central-bank held level falling to below two months of import cover. The trade deficit has widened 64.79 percent during the first 10 months (July-April) of the current fiscal year 2021-22, amounting to a massive $39.3 billion compared to $23.8 billion during the same period of 2020-21. Imports increased 46.4 percent to $65.492 billion, while exports, up 25.5 percent, clocked in at $26.2 billion during the period.
On the other hand, the total liquid foreign exchange reserves held by the country decreased for the 12th consecutive week by $115 million (0.7 percent) on a week-on-week basis to stand at $16.55 billion as of the week ended on April 30, 2022, compared to $16.67 billion in the previous week, weekly data released by the State Bank of Pakistan (SBP) on Friday last showed.