Thursday Dec 08 2022

Rupee continues to falter against US dollar

The currency dealer can be seen counting Rs1,000 notes while a stack of $100 is placed on the table. — Reuters/File
The currency dealer can be seen counting Rs1,000 notes while a stack of $100 is placed on the table. — Reuters/File

  • Rupee closes at 224.37 against greenback after losing 0.09%.
  • Economist cites IMF programme delay as reason behind decline.
  • Investors are also concerned about depleting forex reserves.

The Pakistani rupee on Thursday edged lower against the US dollar in the interbank market on a negative sentiment because of a delay in the International Monetary Fund (IMF) funding and depleting foreign exchange reserves.

The local unit closed at 224.37 against the greenback after losing 0.09% compared to Wednesday’s close of 224.16, data released by the State Bank of Pakistan (SBP) showed.

Ministry of Finance’s former adviser Dr Khaqan Hassan Najeeb, while speaking to, cited uncertainty due to the IMF programme and heightened dollar liquidity crunch as a significant reason behind the negative movement of the rupee.

Highlighting that export receipts and remittances have slowed down making the dollar dearer, Dr Najeeb said: “Pakistan is in a market-determined exchange rate system. In this regime trade deficit and market, influencing news makes a lot of impact on currency changes.”

“Something many commentators have ignored is deterioration in Pakistan’s financial account where inflows have dropped compared to last year’s pressure on the balance of payment,” he added.

The former adviser said the SBP can smoothen the disorderly movement of currency but a weak foreign exchange reserves position as well as bindings of international considerations constrain the central bank from acting beyond moral persuasion.

The rupee has been losing its value, but at a slow rate, due to the central bank's import-control measures. However, unless there is good news about the IMF's bailout package, the domestic currency will continue to be under pressure.

Finance Minister Ishaq Dar has constantly assured that the country will successfully complete the IMF programme. The country is in desperate need of external financing as the IMF's review for the disbursement of its next tranche of funding has been delayed since September.

Pakistan has informed the IMF that it expects to receive $32 billion in foreign funds for the current fiscal year. The estimates include budgetary loans of $23 billion, grants of $1.5 billion, and balance of payments support of $6 billion by the IMF and the United Arab Emirates, according to media reports.