The Rupee recorded a significant loss against the US Dollar in the interbank market during intraday trading, depreciating by Rs 1.5 on Friday.
At the time of this report, the dollar was trading at Rs202.31, registering a decline of Rs1.54.
On Thursday, the rupiah gained 75 paisa to close at 200.77 on improved sentiment following the relaunch of the International Monetary Fund (IMF) program and hopes of receiving $2.4 billion from China .
Friday’s drop comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves continued to decline and fell sharply by $497 million over the past week.
“A significant decline in foreign exchange reserves has created negative sentiment in the market,” said Abdullah Umer, analyst at Ismail Iqbal Securities. company registrar.
According to recent data, SBP’s foreign exchange reserves stood at $9.226 billion during the week of June 3, 2022, compared to $9.722 billion on May 27, 2022. The decline in SBP’s reserves is due to the repayment of external debt. During the review period, reserves held by commercial banks fell by $98 million to the $6 billion mark.
Umer said a surge in oil prices has also heightened concerns over the import bill: “No respite appears to be forthcoming with oil prices hovering between $122 and $123 a barrel.”
He added that the increased margin requirement of exporters for letters of credit has also created pressure on the rupee, also adding to the demand for dollars.
Umer said the upcoming budget is expected to be restrictive in nature and will not have much impact on the forex market.
This is an intra-day update
The story was originally published in Business Recorder on June 10, 2022.