KARACHI: The rupee is poised to break another psychological barrier of Rs280 as its bullish spell against the US dollar entered the 22nd session in a row in both interbank and open markets on Friday.
The State Bank of Pakistan (SBP) reported that the dollar lost another 93 paise to settle at Rs282.69.
Currency dealers are keenly watching the developments with both hopes and fears. They are doubtful about exchange rate stability due to poor foreign exchange reserves, the stalemate in exports and no foreign inflows during the last two months.
They fear that any big outflow for debt servicing could shake up the exchange rate in favour of the dollar. The country is still in a debt trap, particularly on the external front, and is expecting to receive a second tranche under the $3bn Standby Arrangement signed with the IMF.
The first tranche released in July paved the way for inflows from Saudi Arabia and the UAE while the fear of sovereign default was also averted.
Bankers said the positive impact of a cheaper dollar would come in a couple of months as imports have started rising. However, the government has a real fear that surging imports could ultimately increase the current account deficit (CAD), which was brought down to $2.4bn in FY23 from $17.5bn in FY22. The CAD for the current fiscal year is projected at about $6bn but experts said it could be much higher without giving any exact estimate.
A senior banker said the efforts for privatisation of some big state-owned enterprises like PIA could improve the foreign exchange reserves. It will help the country to save the losses being incurred by the PIA each year.
The Exchange Companies Association of Pakistan reported that the greenback on a day-on-day basis lost Rs2.50 to close at Rs281.50.
The open market is lower than the interbank rate and reaching close to Rs280.
Published in Dawn, October 7th, 2023
