EA Report
Lahore, Oct. 4 — Pakistan’s rupee breaks afresh losing streak against US dollar, hitting a new low of 170.8 at inter-bank Monday.
The decline comes after the PKR failed to sustain the slight gain it recorded on Friday to finish at 170.48.
According to State Bank of Pakistan (SBP), the rupee closed at 170.8 against the USD, registering a depreciation of 32 paisas or 0.19%.
PKR has seen its value depreciate by nearly 11% against the USD since its recent high in May, has come under immense pressure as a widening current account deficit, record growth in imports, as well as the Afghanistan situation take toll on the currency.
While the SBP has undertaken a number of measures to curtail imports, the effect has yet to take place. Last week, the SBP decided to impose a 100% cash margin requirement on import of 114 items, taking the total number to 525.
SBP said that the measure will help discourage imports of these items and thus, support the balance-of-payments.
Earlier, SBP revised its Prudential Regulations (PRs) for consumer financing to moderate import and demand growth. As per revised regulations, the maximum tenure of the auto finance facility was reduced from seven to five years.
“(However), the given measures are not much,” Malik Bostan, Chairman Forex Association of Pakistan, told.
Bostan was of the view that the issue is all about supply and demand, adding that an outflow of $300 million is taking place on a daily basis through imports. “There is a daily inflow of $200 million in exports and remittances, leading to a deficit of $100 million,” he said.
Bostan said that the government should temporarily ban a number of products in order to curtail imports. “The foreign exchange reserves need to be around $40 billion for stability.”
As per the central bank, total foreign reserves held by the country are currently around $26.15 billion.
“PKR is likely to remain choppy in the near term until the official announcement of its meeting with the IMF,” said Asad Rizvi, Former Treasury Head Chase Manhattan, tweeted on Monday.
The former banker also said that the Pandora Papers could also potentially lead towards uncertainty.
Pakistan Rupee Exchange Rate