close
Friday December 09, 2022

Rupee rout enters third day as dollar demand rises

Traders pinned this downtrend to lean foreign exchange reserves amid rising imports

By Web Desk
November 15, 2022
A currency dealer can be seen counting $100 notes. — AFP/File
A currency dealer can be seen counting $100 notes. — AFP/File

KARACHI: Pakistan’s rupee’s retreat entered its third day in the interbank market as it eased by Re0.22 or 0.10% versus the dollar to close at 221.91 compared to Monday’s close of 221.69, the State Bank of Pakistan's (SBP) data showed.

Traders pinned this downtrend to lean foreign exchange reserves amid rising imports, while the decline was also attributed to an increase in demand for the greenback from importers.

“Rising dollar demand, foreign funding drought, increase in country’s default risk, and political ferment weighed on the rupee,” said a currency dealer.

Moreover, the postponement of Saudi Crown Prince Mohammad bin Salman’s visit to Pakistan and the rescheduling of talks between the International Monetary Fund (IMF) and Islamabad for the completion of the ninth review of the IMF’s bailout package hurt investor sentiment.

Dealers expect the rupee to remain range-bound in the coming sessions, depending on the demand and supply of the dollars in the market.

As of November 4, the forex reserves held by the SBP fell by $956 million. 

As a result, reserves held by the central bank have fallen to as low as $7.9 billion, enough to cover less than six weeks of imports. The reserves declined on external debt servicing, according to the SBP.

Remittances from abroad dropped by 8.6% to $9.9 billion in the first four months of the current fiscal year. In October, the cash transfers fell to $2.2 billion, a 15.7% decrease from a year earlier. In October, remittances have fallen by 9.1% month-on-month.