According to the State Bank of Pakistan, the rupee depreciated sharply on Friday, finishing at Rs262.6 per dollar, down Rs7.17 or 2.73 percent from yesterday’s close (SBP).
Yesterday saw the biggest single-day loss in both absolute and percentage terms since the current exchange rate system was adopted in 1999, with the local currency’s value falling Rs24.54 to a record low of Rs255.43 in the interbank market.
Separately, the Exchange Companies Association of Pakistan published data showing that the PKR was trading at Rs269 per dollar at 4:15pm (Ecap). In comparison to yesterday’s pricing of Rs262, this represents a depreciation of Rs7, or 2.67 percent.
A “significant” number of remittances have reportedly begun entering the country through official channels, according to Alpha Beta Core CEO Khurram Schehzad.
“Remittances are expected to cross $2.5 billion per month again to gradually reach close to $3bn in the coming months, while exports proceeds are also expected to improve by at least $500 million in the next few months.
“These potentially improved inflows due to currency adjustment (and rerouting of flows from hawala market) should be able to support the country’s forex reserves and therefore stabilise currency parity, and make way for releasing imports (already stuck at ports), retiring of LCs (letters of credit) and so on,” he commented.
According to Schehzad, if the government had lifted the restriction four months earlier, the nation would not have had to bear the expense of significant inflation in the ensuing months, lose $6 billion in various ways, suffer a loss of confidence, and develop a sizable grey market.
“Hope the policymakers now continue with other required adjustments and build a policy action and reform strategy to stabilise the economy and shield the poor with targeted relief,” the Alpha Beta Core CEO added.
Director of financial data and analytics portal Mettis Global, Saad bin Naseer, also said that inflows, including export proceeds and remittances, that had stopped flowing through formal channels for some time, were seen again on Friday after the adjustment.
“A substantial amount has been received. The dollar is expected to stabilise,” he said, adding that the market was expected to get a new direction once money was received from the International Monetary Fund.
“The economy has slowed down so there will be a reduced demand [for dollars]. The pressure will only be due to external loan repayments,” he added.
Zafar Paracha, general secretary of Ecap, stated that although the central bank had promised to provide dollars to exchange companies, they had not yet done so.
The rupee’s depreciation might be stopped if supply was established and the “complicated” government policies were changed, he noted.
“The government’s condition for importers to arrange their own dollars is tantamount to asking them to buy illegally through the grey market because they cannot buy from ECs.
“We are ready to share the government’s burden if they correct their policies and do not become facilitators and promoters of the grey market,” Paracha said.
