Pakistan amounts highest $8bn remittances in July-Sept

The Pakistani rupee plunged to 200.50 against the US dollar in the interbank market on Monday as concerns regarding the upcoming budget 2022-23 and revival of the multibillion-dollar International Monetary Fund (IMF) programme fueled a downtrend.

Today’s downtrend when the currency market opened was followed by a reversal on Friday in the rupee’s momentum as it shed 0.17 percent to close at Rs197.92 against the US dollar in the interbank market.

The last time the rupee had breached the 200 mark was on May 19, when there was higher uncertainty over the revival of the IMF loan programme than now. The rupee only appreciated after the government hiked the price of petroleum products by Rs30 per litre as a result of removing subsidies — one of the main demands of the money lender.

Since the start of this fiscal year on July 1, 2021, to date, the rupee has collectively dropped by over 25 percent, or Rs40, compared to the previous fiscal year’s close at Rs157.54.

Traders believe caution can be expected this week ahead of the unveiling of the fiscal year 2022-23 federal budget scheduled for June 10, with investors expecting IMF conditions of fiscal consolidation to dominate.

Renewed pressure on the rupee on an increase in fiscal-year-end dollar demand from importers and the corporate sector will keep the local currency under pressure.

The report about China’s $2.7 billion deposit placement, meanwhile, has failed to entice traders as they don’t see it as useful for fiscal or external support.

Pakistan’s foreign exchange reserves decreased by $366 million to $15.7 billion in the week ended June 2. Meanwhile, the State Bank of Pakistan’s reserves dropped to $9.72 billion.

Financial expert Asad Rizvi said that credit rating agency Moody’s had last week downgraded Pakistan’s outlook from stable to negative due to external financing factors, to which the market reacted and the rupee dipped.

The financial expert further added choppy conditions would remain intact until the next fiscal year’s budget and the IMF approves the next tranche of loan for Pakistan.

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