KARACHI: The US dollar crossed the Rs202 mark on Thursday leaving no chance for the local currency to resist as the external account weaknesses of the economy got no support from the International Monetary Fund.

The greenback was quoted at Rs203.50 amid extremely thin trading in the open market.

Currency dealers in the interbank market said the exchange rate kept fluctuating as the dollar rose 50 paise during the session but finally added just nine paise. However, exchange companies reported the dollar closing price at Rs202.40 in the interbank against the State Bank of Pakistan’s closing rate of Rs202.01.

They said the dollar was in high demand like the previous session but a deadlock-like situation with IMF over the subsidies on electricity and petroleum products added fuel to the growing uncertainty.

Despite a ban on luxury and non-essential goods, importers were still finding it difficult to arrange dollars for opening letters of credit.

The dollar has gained over Rs19 since the new government took charge of Islamabad. The dollar was traded at Rs182.93 on April 11 after the ouster of the PTI government.

Analysts think besides the falling foreign exchange reserves, the uncertain political situation is more responsible for the depreciation of the rupee.

Reserves fall

The State Bank of Pakistan (SBP) on Thursday reported that the foreign exchange reserves of the country fell to $16.15bn which was the lowest since Dec 6, 2019.

Similarly, the foreign exchange reserves of the SBP fell by $75 million during the week ended on May 20 to $10.1bn. It was the lowest since June 19, 2020.

During the same week, the forex holdings of the commercial banks increased by $64m to $6.1bn.

Currency experts believe the deal with IMF in near future could improve the exchange rate situation in favour of the rupee.

Published in Dawn, May 27th, 2022