SBP says its reserves fully usable for all purposes

KARACHI: The battered rupee reached a new record low on Tuesday, as the finance minister’s statement hinting at the revival of the International Monetary Fund loan programme within two days didn’t calm ruffled investor sentiment.

The local currency was trading at 215.50 against the dollar in the kerb market. It plunged by 2 rupees. It traded at 213.50 on Monday. In the interbank market, the rupee closed at another all-time low of 211.48 to the dollar. It ended at 209.96 in the previous session. The rupee weakened 0.72 percent on a day-on-day basis. "The forex market remains jittery and the rupee extended its losing streak for a seventh straight day. Investors are anxiously waiting for any good news from the IMF on its stalled $6 billion programme," said a currency dealer.

“There is no spark in the market over reports that a staff-level agreement with the IMF is expected very soon, maybe this week. Investors are worried about the fast depletion in the foreign currency reserves,” he added.

The country is facing a balance of payments crisis and is a dire need of external financing amid dwindling forex reserves and falling currency. There are fears that the government may face difficulties paying for imports and external debt with the falling reserves if funding from the IMF doesn’t unlock as soon as possible. The rupee has lost ground sparked by higher import bill amid global crude and other commodity prices. The dollar's strength against major currencies also put pressure on the local unit.

However, the State Bank of Pakistan said that its reserves are fully usable for all purposes and the banks have adequate liquidity to provide to the importers to settle their bills. “The SBP has noticed certain rumors implying that its reserves have dried up or are not usable, that the SBP has stopped import payments, and that banks have run out of US$,” the SBP said in its official Twitter handle. “It is clarified that as of 10th June 2022, SBP liquid foreign reserves stood at $8.99 billion. These do not include gold reserves, and are fully usable for all purposes,” it said. “It is further clarified that SBP has not stopped import payments and commercial banks have sufficient $ liquidity to execute these payments,” it said and adding that indeed, import payments of around US$4.7 billion have been executed through the interbank market during the month so far.

Meanwhile, the bulls staged a comeback at the Pakistan Stock Exchange (PSX). Constant assurance from the top leadership that the stalled $6 billion International Monetary Fund (IMF) programme will be revived this week strengthened investors' sentiment as players cherry-picked stocks that lost valuation during the last bearish spell. The benchmark KSE-100 index traded between hope and despair, which eventually let loose the bulls, who pulled the bourse into the green.

Investors kept a close watch on economic news after the Pakistan rupee continued to break records by dropping to an all-time low of 211.48 against the US dollar in the interbank market. The KSE-100 index gained since the morning bell rang, but some dips were seen at regular intervals. The uptrend turned steeper at midday as the index once again breached the 42,000-point mark. At close, the benchmark KSE-100 index closed at 42,525.95 points after surging 748.97 points or 1.79%.