Rupee extends devaluation on dollar dearth

• Rupee remains under pressure owing to dollar shortage.
• Pressure persists on rupee amid thin forex reserves.
• Importers need dollars to continue opening LCs.

KARACHI: Pakistan rupee Thursday broadened its depreciation versus the dollar in the interbank trade as importers are slated to open letters of credit (LCs) worth millions of dollars during the remainder of the week.

The country’s legal tender lost 0.12% or Re0.26 to close at 222.67 compared to Wednesday’s close of 22.41.

Rupee also remained on the ropes in the open market which, analysts hung on tight dollar supply and a slowdown in the sale of dollars, which was causing a dearth of the greenback in the market.

According to an exchange company owner, sluggish inflows of overseas workers' remittances also weighed.

“Moreover, the political unrest and a stalling of talks between the International Monetary Fund (IMF) and Pakistan for the completion of the ninth review of the loan facility also dented the morale,” he added.

The National Assembly’s Standing Committee on Finance Wednesday was assured by the State Bank of Pakistan (SBP) that action would be taken against the banks, allegedly involved in fleecing importers in the opening of LCs.

“The SBP held meetings with the banks and warned them against their practice, advising them to rationalise the spreads being charged to the customers,” the SBP officials told the committee.

In another development, Pakistan's total debt and liabilities have climbed by Rs12 trillion or 23.7%  to Rs62.46 trillion in the first quarter of this fiscal year. Analysts attributed this surge to a delay in the IMF loan tranche and the devaluation of the rupee.

Foreign exchange reserves held by the State Bank of Pakistan (SBP) increased $3 million to $7.96 billion as of November 11, 2022.

According to data released by the central bank on Thursday, total liquid foreign reserves held by the country stood at $13.8 billion. Net foreign reserves held by commercial banks clocked in at $5.84 billion.