ISLAMABAD: The US dollar rate in the inter-bank and open market trading is set to fall below 220 rupees next week.
On Friday, the dollar-rupee exchange rate in the inter-bank dropped to 228 rupees, from the previous day’s 229.50.
Similarly, in the open market, the dollar-rupee parity has fallen to 225 rupees (for buying) and 228 rupees for selling. The foreign exchange companies are buying dollar at 225 and selling at 228 rupees on Friday.
Since the return of Ishaq Dar, the value of the dollar has declined by 20 rupees in the open market and 11 rupees in the interbank.
In other words, the return of Ishaq Dar as Finance Minister has reversed the unbridled flight of the US dollar, ending financial bleeding, which may be temporary because the foreign exchange reserves of Pakistan are on the decline.
Here are some of the reasons behind the downfall of the dollar in recent days:
On the advice of UNDP, Pakistan will get $10 billion worth foreign loans rescheduling in 2022-23;
Govt-Establishment-IMF are on the same page at this time;
IMF has agreed to government’s demand of advance release of another $1.1 billion in Oct due to floods;
Pressure on foreign exchange reserves will decline from Oct 2022;
Finance Minister Ishaq Dar is more influential and powerful than Miftah Ismail. Dar’s warning to dollar-rupee value manipulators has been working well.
Meanwhile, on Sept 29, the State Bank of Pakistan reported a more than $340 million decrease in its reserves due to external debt repayment, as a result of which the SBP’s reserves fell to around $8 billion, from $9.1 billion a month ago when the IMF released $1.16 billion loan for Pakistan on August 30, a day after its executive board’s approval of the disbursement of the loan.
In just one month time, the IMF loan of $1.16 billion has fizzled out of the SBP’s reserves due to repayment of foreign loans in Sept.
However, from Oct 2022, Pakistan may experience little pressure on the reserves because of rescheduling of over $10 billion foreign loans payable in 2022-23 because of devastating floods.
“A fair value of the US dollar should be around 220 rupees,” Saad Bin Naseer, Executive Director of Mettis Global, a Karachi-based Fin-Tech entity, told The Truth International today.
Currencies of many countries have depreciated in recent months and Pakistan was also one of them because of low reserves.
He pointed out that for the past six months, the SBP’s reserves were hovering below $10 billion. Saad Naseer, however, said that imports of fuel, edible/palm oil, and other items are declining significantly which will improve the current account deficit situation of Pakistan in the months ahead.
He said that in October the reserves of Pakistan could further improve as the government was expecting from the IMF to disburse another $1.1 billion due to the catastrophic impact of the rains and floods in the country.