Rupee slide continues, dollar now at 208.75 – Markets
The rupee saw no respite on Friday and closed at 208.75 against the US dollar in the interbank market on panic over the International Monetary Fund’s (IMF) $6 billion Extended Financing Facility (EFF). ) in Pakistan and the fall in foreign exchange reserves held by the State Bank of Pakistan.
During intraday trading, the currency fell to 209.12 before recovering slightly at the end of the session.
At the close, the local currency ended with a loss of Rs1.08 or 0.52% to close at Rs208.75 per dollar.
The fall comes as the current government is desperate to resume the IMF program and secure the next loan tranche worth $900 million.
In this regard, the government announced a third rise in the price of petroleum products on June 15 in less than three weeks, as it sought to quickly appease the IMF which insisted on the elimination of energy subsidies.
The 3rd time is a charm? : Government increases the price of petrol by Rs 24.03 and diesel by Rs 59.16
Meanwhile, foreign exchange reserves held by the SBP fell further by $241 million to $8.99 billion, the central bank said on Thursday, with the level remaining well below 1.5 months of import coverage.
This is the lowest level of foreign reserves held by the SBP since November 2019, and raises questions about Pakistan’s ability to meet its needs in the future.
Critical level: foreign exchange reserves held by the SBP fall to $8.99 billion, the lowest since November 2019
The local currency was also hit after the US Federal Reserve announced the biggest rate hike since 1994 and the dollar strengthened significantly against global currencies.
New day, new low: the rupee closes at 207.67 against the dollar
Talk to company registrarAlpha Beta Core CEO Khurram Schehzad said uncertainty surrounding the resumption of the IMF bailout is hurting sentiment in the forex market.
“The demand for dollars remains high in the market and this factor is driving up its value against the rupee,” he said. “The local currency is likely to experience volatility until the IMF agrees to disburse the next loan tranche to Pakistan.”
IMF says it did not ask Pakistan to renegotiate CPEC IPP deals
Earlier, Arif Habib Limited’s Research Director Tahir Abbas said the local currency was extending its slide due to post-fiscal uncertainty.
Finance Minister Miftah Ismail previously said the government’s 2022-23 budget, announced last week, failed to convince the IMF to disburse the next tranche of Pakistan’s $6 billion loan program , and that amendments would be necessary in the finance bill.
“The finance minister has clearly stated that the IMF is not happy with the budget and there will be changes,” Abbas said.
“Once the amendments are incorporated into the Finance Bill, only then will the Rupee stabilize.”