Karachi July 25 2022: Pakistan rupee continue to drop against the dollar and drop by 3.63 rupee to trade at 232 in the interbank as Supreme Court is hearing petition of PTI party on the Chief Minister elections in country’s largest province amid depleting foreign exchange reserves.
Foreign exchange reserves held by the State Bank of Pakistan were decreased by USD 389 million to USD 9.32 billion on higher debt repayments, revealed on Thursday by State Bank of Pakistan.
The dollar held firm in early trading on Monday as traders sought safer assets and braced for a sharp U.S. interest rate hike later this week.
Acting Governor State Bank of Pakistan (SBP) Dr Murtaza Syed on Saturday said Pakistan’s $33.5 billion external financing needs were fully met for financial year 2022/23, adding that “unwarranted” market concerns about its financial position will dissipate in weeks.
The Supreme Court resumed hearing on Monday PML-Q leader Chaudhry Parvez Elahi’s petition challenging Punjab Assembly Deputy Speaker Dost Mohammad Mazari’s decision in the chief minister’s re-election last week, which led to Hamza Shehbaz’s victory.
On Saturday,the Supreme Court has said in its order that Hamza Shehbaz will work as a trustee of the Chief Minister till Monday.
A 3-member bench headed by Chief Justice of Pakistan Justice Umar Atta Bandial at the Supreme Court Lahore Registry heard the request of Parvez Elahi on the issue of Chief Minister Punjab.
“Because we do not have space in foreign exchange reserves to reduce these and we also do not have other reserves. So we want to strike balance between imports exports and remittances,” the federal minister said while addressing a press conference.
Since by elections of largest province, rupee falls 21.05 rupees or 9.9 percent. Fitch revision in Pakistan outlook to negative from stable amid increase in political tension despite Pakistan reaches staff level agreement with IMF for release of $1.17 billion under 7th and 8th review of Extended Fund Facility further worsen the situation.
Ratings agency Fitch on Tuesday revised its outlook on Pakistan to negative from stable, citing deterioration in country’s external liquidity position and financing conditions since early 2022.
Fitch affirmed Pakistan’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at ‘B-‘.
However, SBP says the recent movement in the Rupee is a feature of a market-determined exchange rate system says State Bank of Pakistan.
Under this system, the current account position, relevant news items, and domestic uncertainty together determine daily currency fluctuations.
“Recent Rupee depreciation against the US$ is also in large part a global phenomenon. Globally, the US$ has surged by 12% in the last 6 months to a 20-year high, as the Fed has aggressively raised interest rates in response to rising inflation.” Says Pakistan Central Bank few days ago.
Like most advanced and emerging market currencies across the world, the Rupee has depreciated against the US$ since Dec 21. It has depreciated by 30% over this period.