Rupee falls on depleting forex reserves

KARACHI: The Pakistani rupee fell 46 paisas to reach Rs207.94 against the dollar on Monday as the foreign exchange reserves of the country dropped to an alarmingly low level.
The local unit shed 46 paisas to close at Rs207.94 to the dollar from Friday’s closing of Rs207.48 in the interbank foreign exchange market.
The dealers said that depleting forex reserves of the country remain one of the biggest threats to the stability in the value of rupee.
A significant decline in the foreign exchange reserves amid import payments and high dollar demand continued to dent the rupee stability against the greenback, they added.
The local unit made a record recovery of Rs4.70 against the dollar on June 23, as the government officials announced that it had signed a $2.3 billion loan facility agreement with a consortium of Chinese banks.
However, the local currency failed to maintain its upward movement and recorded a marginal loss on the last day of the previous week, partly due to depleting forex reserves of the country.
The foreign exchange reserves held by the State Bank of Pakistan (SBP) declined by a massive $748 million during the week ended on June 17, falling to a critical level of $8.24 billion.
Total liquid foreign reserves held by the country stood at $14.21 billion as of June 17, with net foreign reserves held by commercial banks clocking in at $5.97 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 Rs50.4 or 31.94 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs207.94.
At the open market, the buying and selling of the dollar was recorded at Rs206 and Rs208.5 at 4:00pm PST.