KARACHI: The rupee’s losses continued on Thursday as the local currency closed at a record low of Rs239.94 against the dollar in the interbank market.
According to the Forex Association of Pakistan (FAP), the rupee lost 4.48, or 1.89 per cent, compared to yesterday’s close of 236.02 by 12:03pm.
Consequently, the rupee was trading at 240.5 against the greenback.
The rupee closed at 239.94, down 3.92, or 1.63pc, according o the State Bank of Pakistan (SBP).
Exchange Companies Association of Pakistan General Secretary Zafar Paracha laid the blame squarely on the country’s political situation and the government’s lack of action.
“The country’s political situation is bad but the government and political parties appear to be unconcerned. They are only concerned with saving their government,” he rued.
Paracha pointed out that ratings agencies had downgraded Pakistan’s outlook while the tranche expected to be released by the International Monetary Fund (IMF) had reportedly been delayed.
In addition, there was uncertainty about whether the Fund’s executive board would demand more actions prior to the tranche’s release.
The real reason for the rupee’s decline was that “we are not doing what we are supposed to do and not taking any practical steps”, he said.
The financial situation had worsened due to mismanagement and lack of attention, the currency dealer said.
In order to stop the rupee’s freefall, the government should incentivise exchange companies and overseas Pakistanis, link imports to exports, and reduce its expenditures, he opined.
“The public is playing its role and paying taxes but those responsible do not seem to be doing anything,” Paracha added.
Pak current account deficit swells to $17.4bn
The current account deficit (CAD) swelled to $17.4 billion in FY22, which could be the most painful shock for an economy already in trouble with serious imbalances.
The State Bank of Pakistan (SBP) on Wednesday reported that the country recorded a CAD of $17.406bn in FY22 compared to a gap of just $2.82bn in FY21.
The massive CAD speaks a lot about the severe problem of the balance of payments. The PML-N-led coalition government posted a CAD of $4.323bn in the April-June period of 2021-22, which was the second highest quarterly deficit of the fiscal year that ended on June 30.
The deficit of over $17.4bn is more inflicting in the wake of no inflows as loans while the commercial markets are not ready to accept Pakistan’s bonds due to higher risks.
The current account deficit has exceeded the SBP’s projection for the deficit in FY22. The CAD increased to 4.6 per cent of GDP in FY22, up from 0.8pc in FY21.
In November 2021, the SBP issued its Annual Report and said the current account deficit is projected in the range of 2pc to 3pc of GDP during FY22.
Reports appearing in local and foreign media suggest that Pakistan can’t unlock the dollar inflows until the IMF executive board approves its staff-level agreement reached on July 15.
Gold price hit again
The one tola rate on Wednesday climbed to an all-time high of Rs152,000, showing a jump of Rs2,500. While the 10-gram rate soared by Rs2,143 to Rs130,315.
Gold dealers said the massive fall in the rupee value against the dollar is one of the main reasons for pushing up the yellow metal rates in addition to a paltry rise of $3 per ounce to $1,721 on the global market.