United States dollar continued set new records on On Tuesday, the price rose to 212 rupees. against local currency in the early morning trade in interbank market.
According to the Forex Association of Pakistan (FAP), the rupee depreciated by over Rs2 to hit an all-time low of 212 rupees against in dollar from Monday close of 209.96 rupees. Yesterday the dollar strengthened by 1.21 rupees – the trend continues. for over already a week.
According to Mettis Global – a web-based on financial data and analytics portal – the rupee suffered a huge loss of Rs 6.4 for five sessions in a row last a week.
Komal Mansour, head of research in Tresmarck, said Dawn.com that it seemed as if the country was now completely dependent on on IMF assistance.
“There are some support for rupee around current 211 levels, but we see a gradual depreciation of rupee on daily until an agreement is signed with IMF staff,” she said.
In the meantime, an IMF loan has been suspended since early April as negotiations with in international money creditor remain unconvincing, with previously reserved creditor over fuel and energy subsidies introduced by the previous PTI government and now over goals set through new government for upcoming fiscal year.
Pakistan signed a 39-month extended financing agreement worth $6 billion. with IMF in July 2019, but the Fund stopped the payment of about 3 billion dollars when the previous government refused on their obligations and announced fuel and energy subsidies.
Yesterday, Finance Minister Miftah Ismail expressed hope that the agreement with IMF for revival of The Extended Funding Facility (EFF) will be reached “within one or two days.
Before his optimism, Dawn The report, citing diplomatic sources, said the United States agreed help Pakistan is negotiating a deal with IMF.
Previously, media reports claimed that Islamabad was “seeking Washington’s support”. support” for extension of the Extended Funding Facility (EFF) with IMF. As the largest shareholder, the US has significant influence over IMF decision-production.
Depletion of foreign reserves ‘puts pressure’
FAP Chairman Malik Bostan blamed rapidly depleting foreign exchange reserves for this for “applying pressure” on rupee.
“After a long time, foreign exchange reserves fell to single digits, which worried market,” he said.
Pakistan’s reserves fell by another $234 million by the close, according to the SBP. just below $15 billion in all. Central bank share in these stocks just less than $9 billion.
Secondly, Bostan added, demand for in dollar high because of coming season of Hajj. “More than 400,000 Pakistanis are traveling for Hajj is year and buy dollars. This negatively affects the local currency.”
Rumors of stop LC
Previously Dawn the report said that the currency market was gripped by uncertainty and rumors that banks had stopped opening letters of credit (LC)
However, this situation was refuted by the central bank. “The State Bank did not prohibit banks from making import payments. Even today, about $200 million in import payments have been made,” said SBP chief spokesman Abid Qamar.
Meanwhile, SBP required pre-approval before opening of LC or registration of contracts for certain types of import like automobiles (CKD), mobile phones and some types of of technique. But these instructions were issued on May 20, not today, he said.
On May 20, SBP issued a circular after decision of federal government prohibit import of luxury goods and essential goods. decision means consuming fewer dollars while saving economy from imported inflation. So far, the country’s import account already exceeded $70 billion in outgoing year.
