Rupee dips 0.5pc against dollar on week basis

KARACHI: Pakistani rupee failed to hold ground against the US dollar during the week with only one working day and shed 0.50 percent (Rs0.94) after gaining Rs1.06 in the preceding week.
The rupee fell from 185.69 to Rs186.63 against the American currency in the interbank market last week. Within the open market, the rupee suffered from 185.50/187 per dollar to 186/187 a dollar during the week.
The rupee came under pressure after Eid-ul-Fitr holidays as the Middle East markets did not open and the nostro accounts failed to receive funding. As the flow of remittances remained high during the holy month of Ramazan and also due to Eid, there are possibilities that remittances may dry out for about a week or so. This factor also increased the dollar’s demand. The rupee rose in the preceding week by Rs1.06 on the back of improvement in the supply of the greenback as an increase in remittances for Ramzan lent support to the domestic currency.
Overall, the rupee has depreciated by Rs29.14 against the US dollar during the ongoing fiscal year 2021-22 and Rs10.12 during the current year 2022.
According to experts, gloomy macros will continue to put pressure on the local unit. They said though there is stress on the economy, yet some stability is visible. Despite better exports, the current account deficit has surged to alarming levels and in order to address this challenge, there is a need to look at the agriculture sector and curtail needless imports, they added.
On the other hand, the total liquid foreign exchange reserves held by the country decreased for the 12th consecutive week by $115 million (0.7 percent) on a week-on-week basis to stand at $16.55 billion as of the week ended on April 30, 2022, compared to $16.67 billion in the previous week, weekly data released by the State Bank of Pakistan (SBP) on Friday showed.
The data further revealed that reserves held by the central bank during the week dipped by $59 million or 0.6 percent on a week-on-week basis to clock in at $10.5 billion, mainly due to external debt payments. Similarly, the reserves of commercial banks went down by $56 million or 0.9 percent on a week-on-week basis to $6 billion.
Currency dealers believe that the statement of International Monetary Fund (IMF) that its mission will visit Pakistan in May to resume discussions over policies for completing the seventh review may help improve the sentiment and stabilise the rupee. Traders and markets are looking at the IMF as progress with the Fund instils investor confidence in the economy, stabilises Pakistan’s foreign exchange reserves, and unlocks funding from other international financial institutions. – TLTP