Dollar goes up, Reserves go down, economy goes round and round

KARACHI: Pakistani rupee’s downward trajectory continues, reaching a new low in the open-market early on Friday. Before midday on the final trading day of the week, PKR has already lost 50 paisas, trading around Rs 306.51 to the Dollar. Yesterday, PKR lost Rs 1.55 to the greenback, closing on Rs 306 to the USD.

PKR has lost over Rs 2 to the greenback in the past three days alone. The authorities are trying to arrest this decline in the rupee through a crackdown on illegal forex dealers, but the rising import pressures, coupled with factors like smuggling continue to add more pressures on the local currency.

Meanwhile, Pakistan’s foreign exchange reserves held by the State Bank of Pakistan (SBP) also reported a further decline by $81 million, clocking in at $7.849 million, for the week ending August 25.

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According to the latest data released by the central bank, total forex reserves by held by the country fell to $13.171 billion, from $13.248 billion a week ago.
The overall decline in SBP reserves was marginally offset by the increase in the forex reserves held by the commercial banks, that showed a weekly movement from $5,318 million to $5,321 million.

Debt repayments was cited as the primary cause for the decrease in the foreign currency reserves. Additionally, rise in import payments as the restrictions ease and the rupee’s deterioration can be said to be a contributing factor.