KARACHI: Despite promises of massive financial help for Pakistan, the rupee failed to put up any resistance and lost another 5 paise against the US dollar in the interbank market on Wednesday.

The international community committed to giving Pakistan about $10bn to help it recover from devastating floods.

However, Finance Minister Ishaq Dar said that almost 90 per cent of pledges made by the international community in Geneva were project loans that would be rolled out over the next three years.

Financial analysts said the commitment of over $10 billion by the international community is a positive sign but it could not change the depressive sentiments prevailing in the currency market mainly due to declining foreign exchange reserves with zero inflows amid unending political and economic instability.

The State Bank of Pakistan (SBP) reported the dollar price at Rs227.93 compared to Rs227.88 a day before.

Currency dealers said the dollar price provided by the SBP was not real. Banks are charging higher rates while the non-opening of letters of credit is still a serious problem.

The dollar rate was Rs238 in the open market, but the exchange companies were mostly empty to provide greenbacks. They said it was also being managed under government pressure.

The grey market is selling dollars not less than Rs270.

The impact of Saudi Arabia’s decision to invest $10bn and place another $2bn in the State Bank’s account failed to boost the market sentiments. The government needs to play smart to realise this investment as quickly as possible to shore up its dwindling foreign exchange reserves.

Some bankers believe that the entire committed inflows are linked with the revival of the IMF programme and the government has been left with no option but to meet the preconditions set by the fund for resuming talks.

Published in Dawn, January 12th, 2023