Pakistan rupee holds ground against US dollar

The Pakistan rupee avoided any further depreciation and maintained its value against the US dollar in the interbank trading on Monday, as the country is witnessing a shrinking current account deficit which resulted in somewhat improved supply of greenback.

During the session, the rupee traded in a band of 20 paisa in interbank trading and ended the day at Rs224.94.

However, the money changers were selling the dollar for Rs231.78 to Rs234.09. It means the huge gap between interbank and open market persists which is causing uncertainty in business circles and resulting in additional burden for them.

During the current financial year (FYTD), the rupee has so far lost Rs20.09 or 8.93 percent in value against the US dollar while the loss stands at Rs48.43 or 21.53 percent since January 1 (CYTD).

Also on Monday, the local currency lost 44 paisa to the pound sterling with a value Rs274.46 in interbank trading against the previous session’s closing of Rs274.03.

Similarly, the Pakistan rupee weakened by 14 paisa against the euro which closed at Rs239.34.

Last week, the State Bank of Pakistan said the current account deficit had reduced by over 50 percent during the first five months of the current fiscal year.

On the other hand, the import of petroleum products also shrank by $7.70 billion after an 8.11 percent decrease in the abovementioned period – a trend contributing to the reduction in current account deficit. 

It is certainly a welcoming news for the cash-starved country, grappling with a deprecating rupee, shrinking foreign reserves, high interest rate and an alarming inflation.

However, the good news was followed a bad one as Pakistan saw a massive decline in foreign direct investment and textile exports during the first five months of the fiscal year 2022-23.

According to details, the foreign direct investment dropped by more than half to $430.1 million in the first five months of FY23 against an amount of $884.9 million recorded for the corresponding period last year.

Similarly, the FDI stood at $81.8 million in November after a 48 percent dip when compared with $158.4 million in the same month in 2022.

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