US dollar storms ahead as problems multiply for Pakistani rupee

The problems come in loads for the Pakistani money market as the US dollar on Thursday stormed ahead to Rs239.94 against the Pakistani rupee amid snowballing current account deficit and never-ending political instability, reported 24NewsHD TV channel.

According to the forex dealers, the greenback appreciated straight away by another Rs3.92 as the intrabank trading concluded on Thursday. The Rs240 mark is another historic record of the American currency against its Pakistani counterpart which it touched today but later settled for Rs238.92.

Interbank closing #ExchangeRate for todayhttps://t.co/3HKHwEmKLf pic.twitter.com/OZl2VqDeLR

— SBP (@StateBank_Pak) July 28, 2022

On Wednesday, the American currency hauled up another mighty gain of Rs3.09 taking its value to a historic high of Rs236.02 against the pathetic performance of the Pakistani rupee.

Interbank closing #ExchangeRate for todayhttps://t.co/yreXph4Iph pic.twitter.com/yfLNF31hjS

— SBP (@StateBank_Pak) July 27, 2022

The situation was not different in the open market also where the US dollar bulldozed Pakistani rupee to reach the historic high of Rs240 after gaining four rupees.

Zafar Piracha of Exchange Companies Association has said that the record depreciation in the value of Pakistani rupee will trigger a tsunami of inflation.

He maintained that the government has not been taking any steps to stem the rise of the US dollar.

Meanwhile, Pakistan’s current account deficit (CAD) widened to $2.3 billion in June 2022, up by 59% as compared to the figure in May when it stood at $1.43 billion, data released by the State Bank of Pakistan (SBP) showed.

Cumulatively for the fiscal year 2021-22, the current account deficit clocked in at $17.4 billion on a yearly basis when compared with the figure of $2.82 billion during FY21.

The data showed that the main reason for the widening current account deficit was the surging import bill.

“As foreshadowed by earlier PBS data, a surge in oil imports saw CAD rise to $2.3bn in Jun despite higher exports & remittances. So far in Jul oil imports are much lower & deficit is expected to resume its moderating trajectory,” the central bank said in a statement.

The report noted that 3.3mn metric tons of oil was imported in June, 33% higher than in May.

“Together with higher global prices, this more than doubled the oil import bill from $1.4bn to $2.9bn. By contrast, non-oil imports ticked down.”

Miftah sees rupee rebounding in couple of weeks

Finance Minister Miftah Ismail had said the pressure on the rupee will “vanish” in a couple of weeks. Miftah Ismail on Tuesday said the inflows of dollars into Pakistan will soon be higher than the outflow, resulting in a stable exchange rate.

“Nobody is happy with surgery, but sometimes it’s necessary,” he said while defending his policy of import curtailment to reduce the dollar outflow — a measure that may slow down economic growth and reduce tax collection at the import stage.

He repeatedly insisted that the fears of a sovereign default were overblown and that the policymakers knew “all the balls that (they) have in the air” i.e. expected inflows of the foreign currency in the next quarter or so.

Reporter Ashraf Khan