PKR-sheds-1-58-rupee,-hits-176-7-against-USD-The-Correspondent

The US dollar continued to lose ground against the Pakistani rupee on Thursday as the greenback lost 1.50 to Rs217.50 in interbank trade at around 10 am.

The dollar has lost 4.67 during the last three sessions despite deadly floods causing huge economic losses to the country.

On Wednesday, the rupee closed at 218.75 per dollar after gaining 1.37 during the interbank market, down from Tuesday’s close of 220.12, according to the State Bank of Pakistan’s (SBP) data.

The major reason for rupee’s uptrend was due to the release of the International Monetary Fund’s (IMF) much-needed $1.17 billion tranche.

Economist and former adviser to the federal ministry of finance Dr Khaqan Hassan Najeeb said that the resumption of IMF programme would certainly help build Pakistan’s depleting foreign exchange reserves, but the flood devastation has increased the country’s foreign financing needs.

“This, along with the expected slowdown in agricultural growth and a subsequent slowdown in demand from rural areas is expected in coming months,” he said, noting that a sizable volume of motorbikes and four-wheelers are sold in rural areas.

He said that the Pakistan Stock Exchange is expected to trade range bound as the country determines the impact of damage and slowdown of the economy.

Exchange Companies Association of Pakistan (ECAP) General Secretary Zafar Paracha said that he expected the local unit to keep appreciating and fall to 200 in the coming days.

Paracha highlighted that as the deal materialised after a long delay, the government took some measures for fiscal tightening that led to an increase in smuggling.

Apart from the smuggling of dollars to other countries, Paracha said that the heavy regulatory duties imposed on imports led to an increase in the smuggling of commodities — which resulted in a shortage of dollars.

He noted that although the amount from the global money lender amounted to $1.1 billion, it will pave the way for Pakistan to get additional funds from other multilateral and bilateral organisations.

Paracha said that the foreign direct investment would also increase and expected that the overall economy would witness a boost in the coming days.

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