ISLAMABAD - The exchange rate of the Pakistani rupee depreciated by Rs 5.22 against the US
dollar in the interbank trading on Friday and closed at Rs 276.57 against the previous day’s closing of Rs 271.35.
According to the Forex Association of Pakistan (FAP), the buying and selling rates of dollar in the open market were recorded at Rs 276.32 and Rs 276.82 respectively. The price of the euro appreciated by Rs 1.71 and closed at Rs 301.28 against the previous day’s closing of Rs 298.57, according to the State Bank of Pakistan (SBP). The Japanese yen increased by 04 paisas to close at Rs 2.14, whereas an increase of Rs 1.51 was witnessed in the exchange rate of the British pound, which was traded at Rs 337.36 as compared to its last closing of Rs 335.85. The exchange rates of the Emirates dirham and Saudi riyal increased by Rs 1.42 each to close at Rs 75.29 and Rs 73.70 respectively.
The free-floating of rupee continues to make the local currency extremely vulnerable to the onslaught of mighty US dollar. Currency experts said that despite a free-floating exchange rate, the situation was still uncertain and exporters and others were reluctant to sell their dollars in the market. Apart from this, the depleting forex reserves are causing a great concern for the rupee stability. The foreign exchange reserves held by the State Bank of Pakistan were recorded at ten years low, dropped by $592.2 million to stand at $3.08 billion during the week ended on January 27, 2023, data published by the SBP on Thursday showed. The SBP said that the decline in foreign exchange reserves was due to scheduled external repayment. The present level of the official reserves have fallen below one month import cover. The import bill of the country for the month of January 2023 was recorded at $4.856b, according to PBS.
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The benchmark foreign exchange reserves of a central bank should be at a level to provide three months import cover. Tahir Abbas, head of research at Arif Habib Ltd said: “The country is in dire need of fresh inflows and the resumption of the IMF programme as soon as possible to avoid the crisis.” Pakistan is currently holding negotiations with the IMF mission which is in Islamabad for talks on the ninth review. The Fund had set several conditions for resuming the bailout, including a market-determined exchange rate for the local currency and an easing of fuel subsidies. The central bank recently removed a cap on exchange rates and the government raised fuel prices by 16pc. The impact of the increase in the value of the dollar is also being felt by citizens as imports become more expensive, and the cost of living rises.