KARACHI: The Pakistani rupee eased for the second day in a row against the US dollar on Thursday due to growing demand for imports and corporate payments.
The exchange rate registered a decline of seven paisas to end at 21.88 rupees to the dollar from the previous day’s close of 214.95 rupees on the interbank foreign exchange market.
READ MORE: Dollar ends losing streak against Pakistani rupee; closes at Rs214.88
A day earlier, the dollar appreciated for the first time since the rupee hit a record high of 239.94 rupees on July 28, 2022.
Local units gained around Rs25.04 or 10.85% over the past 11 trading days. The rupee has been continuously recovering against the greenback since hitting an all-time low of 239.94 rupees per dollar on July 28, 2022.
It is important to note that the rupiah has seen a recent decline despite the fact that the IMF announced the date of the board meeting to review the Pakistani tranche.
READ MORE: The dollar slides for the 11th day against the Pakistani rupee on August 16, 2022
Additionally, there are reports of renewed Saudi financial aid which has helped improve sentiment in the FX market. The continued decline in international oil prices also helped the rupiah gain ground.
Furthermore, they said the close monitoring by the State Bank of Pakistan (SBP) eased the pressure on the exchange rate.
It should be mentioned that the country’s foreign exchange reserves have been massively depleted.
Pakistan’s foreign exchange reserves fell by 43 months to $13.56 billion in the week ending August 05, 2022. The country’s foreign exchange reserves fell by $648 million from $14.21 billion dollars a week ago, i.e. July 29, 2022.
Pakistan’s foreign exchange reserves were estimated at $13.597 billion in January 2019. The country’s foreign exchange reserves reached a record high of $27.228 billion on August 27, 2021. Since then, foreign exchange reserves have declined by $13.668 billion of dollars.
READ MORE: Dollar Falls For Ten Straight Days Against Pakistani Rupee; ends at Rs213.98
However, the recent rally in the value of the rupee can be attributed to the efforts of the central bank.
The State Bank of Pakistan (SBP) launched an inspection against exchange companies on August 1, 2022. On August 2, 2022, the SBP suspended the operations of four branches of two CEs (Galaxy Exchange Co and Al-Hameed International Money Exchange Co) for violating SBP regulations.
The central bank has also imposed pecuniary sanctions on certain CEs in the recent past. In addition, due to violations of SBP’s instructions, the agreements of 13 franchises have been terminated by six different CEs in the recent past.
The dealers said that after assurances from the International Monetary Fund (IMF) that Pakistan had met all the requirements for the disbursement of the $1.2 billion tranche under the Extended Financing Facility (EFF) .
Currency experts said the rupiah was also supported by the shrinking trade deficit in the first month of the current fiscal year.
READ MORE: Dollar drops to Rs215.49 against Pakistani Rupee on August 12, 2022
The trade deficit narrowed by 18.33% to $2.62 billion for the month of July 2022, compared to a deficit of $3.23 billion in the same month last year.
The trade deficit narrowed mainly due to a 12.8% drop in the import bill during the month under review. The country’s import bill shrunk to $4.86 billion in July 2022 from $5.57 billion in the same month last year.