KARACHI: The Pakistani rupee gained 76 paisas to reach Rs200.76 against the dollar on Thursday after the government banned import of luxury items and increased fuel prices.
The local unit recovered 76 paisas to close at Rs200.76 to the dollar from Wednesday’s closing of Rs201.52 in the interbank foreign exchange market. The rupee recorded the historic low of Rs202.83 on June 7, 2022.
The rupee made gains for the second consecutive session on the back of the State Bank of Pakistan (SBP) officials refuting claims regarding the foreign currency accounts, Roshan Digital Accounts (RDA) and safety deposit lockers, the dealers said.
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The local currency showed some respite in the market after the government on two occasions increased the prices of petroleum products since May 26, 2022 in order to meet the prerequisite condition of the International Monetary Fund (IMF) for the resumption of the multimillion dollar Extended Fund Facility (EFF) programme, they added.
Additionally, the government on May 18, decided to impose a complete ban on the import of unnecessary and luxury items amid the continuous depreciation of the rupee and an unsettling economic crisis in order to deal with the country’s unsettling economic woes.
Since the announcement of raising petroleum prices the rupee witnessed some growth, however, the falling foreign exchange reserves of the country remain one of the biggest threats to the stability in the value of rupee.
The local market is expected to remain under pressure as the government is scheduled to present the budget on June 10, which will likely play a decisive role in the resumption of the loan programme to Pakistan.
The foreign currency reserves held by the State Bank of Pakistan’s (SBP) were down $366 million to reach $9.72 billion during the week ended May 27, compared with $10.08 billion on May 20.
The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $15.77 billion, while the net reserves held by banks amounted to $6.04 billion.
The widening current account deficit is another threat to the stability of the local unit. Pakistan’s trade deficit showed a sharp growth to $3.64 billion in March 2022, registering an increase of 12 per cent over the same month of the last fiscal.
The total trade deficit escalated to $35.52 billion in the first nine months (July-March) period of the current fiscal year against $20.8 billion in the same period last fiscal year.
The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs43.22 or 27.43 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs200.76.
At the open market, the buying and selling of the dollar was recorded at Rs200.5 and Rs202.5 at 3:15pm PST.