ISLAMABAD, June 21(Alliance News): During the depreciation of the rupee, the US dollar continued to set new records and reached 21 212 against the local currency during trading in the interbank market.
According to the Forex Association of Pakistan (FAP), the rupee depreciated by more than Rs 2 and reached a low of Rs 212 against the dollar from Rs 209.96 yesterday.
According to financial data and analytics web portal Mattis Global, the rupee depreciated sharply by Rs 6.4 during the last five consecutive sessions.
Majid Jarral, an official of research at Tracemark, told Alliance News about the depreciating value of the rupee that the country now appears to be totally dependent on the IMF’s bailout package.
“There is some support near the current value of 211 but we are seeing a gradual depreciation of the rupee on a daily basis and this trend will continue till an agreement is signed with the IMF,” he added.
On the other hand, the IMF loan program has been stalled since early April, while negotiations with Pakistan’s International Monetary Fund have been fruitless.
The international lending body had earlier expressed concerns over the fuel and energy subsidies introduced by the PTI government and now has expressed concerns over the targets set by the new government for the next financial year.
Pakistan signed a 39-month فن 6 billion expansion fund program with the IMF in July 2019, but the International Monetary Fund (IMF) withheld about ً 3 billion in installments after the previous government deviated from its promises. Fuel and energy subsidies were announced.
Yesterday, Finance Minister Muftah Ismail expressed hope that an agreement with the IMF to restore the Extended Fund Facility (EFF) would be reached in a day or two.
Ahead of the finance minister’s hopes, a Dawn report quoted diplomatic sources as saying that the United States had agreed to help Pakistan negotiate an agreement with the IMF.
Earlier, media reports claimed that Pakistan was seeking Washington’s support for resumption of its expansionary fund program with the IMF, as the IMF’s largest shareholder. The United States has considerable influence over the decisions of the International Monetary Fund.
Pressure on declining foreign exchange reserves FAP chairman Malik Bostan attributed the pressure on the rupee to the rapidly declining foreign exchange reserves.
He said that after a long period of time, foreign exchange reserves have come down to single digits due to which there is concern in the market.
According to the SBP, Pakistan’s foreign exchange reserves have further declined by 23 234 million to a total of less than 15 15 billion while the central bank’s share in these reserves is less than 9 9 billion. ۔
Malik Bostan further said that the second major reason for the depreciation of the rupee is the high demand for dollars due to the current Hajj season, this year more than 400,000 Pakistanis are going on Hajj and they are buying dollars in this regard The local currency is being badly affected.
Rumors of LC closure Earlier, a Dawn report had said that the currency market was in a state of uncertainty and rumors were circulating that banks had stopped opening Letters of Credit (LCs).
However, the central bank denied the allegations.
In this regard, the Chief Spokesperson of the SBP, Abid Qamar, while issuing a statement, said that the SBP did not stop the banks from making import payments, even today, about 200 million worth of import payments have been made.
The statement further said that prior approval of SBP is required before opening of LCs or registration of contracts for certain types of imports such as cars (CKD), cell phones and certain types of machinery but these instructions are not available today. Rather, they were released on May 20.
In this regard, the SBP had issued a circular on May 20 following the decision of the federal government to ban the import of luxury and non-essential items.
The decision was aimed at protecting the country’s economy from import inflation and spending less dollars, as the country’s import bill has already exceeded 70 billion.