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Rupee extends losses as forex reserves continue to deplete

Rupee loses 0.01% against dollar, closes at 224.40, SBP data shows

By Business Desk
December 09, 2022
One dollar notes with the signature of US Treasury Secretary Janet Yellen are unveiled at the Bureau of Engraving and Printing Western Currency Facility on December 8, 2022 in Fort Worth, Texas. — AFP
One dollar notes with the signature of US Treasury Secretary Janet Yellen are unveiled at the Bureau of Engraving and Printing Western Currency Facility on December 8, 2022 in Fort Worth, Texas. — AFP

The Pakistan rupee's rout against the dollar entered the fifth day in the interbank market on Friday.

Data released by the State Bank of Pakistan (SBP) showed that the greenback closed at 224.40 against the local unit after gaining 0.01% compared to Thursday's close of 224.37.

The development comes after foreign exchange reserves held by the State Bank of Pakistan (SBP) plunged to an alarming level after falling 10.45% to a four-year low.

The foreign currency reserves held by the SBP were recorded at $6,714.9 million as of December 2, down $784 million compared with $7,825.7 on November 25, data released by the central bank showed.

The reserve crisis has raised fears that the country might not be able to meet its foreign debt payments, however, SBP Governor Jameel Ahmad believes that Pakistan can repay its debts.

In the latest episode of the SBP podcast series, Ahmad reiterated that all debt repayments were on track and that country's foreign exchange reserves were expected to increase in the second half of the current fiscal year.

Commenting on the severity of the dollar crunch, the Ministry of Finance’s former adviser Dr Khaqan Hassan Najeeb, said that it was important to consider that Pakistan had only received $4 billion in the last five months (July-November 2022) — this was beside the rollover.

“The slow inflow of funds, heavy payments — including Sukuk payment — and a less than satisfactory financial account have all added pressure on the reserves which now barely cover a month and 10 days of import payment,” he stated.

But that's not it as the International Monetary Fund's (IMF) programme is also stalled after Pakistan did not meet the all requirements for the ninth review.

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.