KARACHI: The rupee continued its nosedive against the dollar for the ninth straight session in the interbank market, losing 2.40 to the US currency on Wednesday.

The State Bank of Pakistan (SBP) reported the closing price of the dollar on Wednesday at Rs234.32 against Rs231.92 a day earlier.

Speaking to Dawn, currency experts said the pressure was mounting in both the open and banking markets as the reserves of the SBP did not show any improvement even after the inflow of International Monetary Fund’s (IMF) $1.2 billion.

Finance Minister Miftah Ismail has assured many times that his government has succeeded in arranging $4bn in inflows, a pre-condition for the resumption of the IMF loans. Currency dealers are watching the foreign exchange reserves of the SBP, which are now a barometer for the exchange rate. The reserves of the SBP increased after inflows of $1.2bn from the IMF, but it was a temporary respite. The currency market is waiting for the promised $4bn inflows to change the depressing trend for the local currency and businesses.

Little room left for businesses to manage their plans

Both importers and exporters are unable to plan for the next step because the dollar’s daily rise has left little room for businesses to manage their plans.

In the last nine consecutive trading sessions, the rupee fell by 6.9 per cent, or Rs15.77, against the US dollar. The dire situation is clear; businesses are unable to keep up with the frequent changes in the exchange rate, while inflation, which is expected to be 19pc in FY23, could be much higher. Inflation remained very high in the first two months of the new fiscal year, with 24.9pc in July and 27.3pc in August (year-on-year basis).

The flood-related fears are also mounting since they require more than $13bn to support the affected people across Pakistan. The import of food items may go up in the coming days as the country loses major crops on a large scale. Imports will increase dollar demand in the market, streng­thening the already-strong greenback.

The dollar was closed at Rs239 in the open market, but it was difficult to find dollars for travel and other purposes.

Govt raises Rs235bn through PIBs

Meanwhile, the government raised Rs235 billion through auctions of Pakistan Investment Bonds (PIBs) against a target of Rs175bn on Wednesday.

The government slightly changed the rate for PIBs, but it was negligible. A total of Rs 19.144bn was raised for three-year PIBs, and Rs181bn was raised for five-year PIBs, with cut-off yields of 13.92 per cent and 13.39pc, respectively.

The government raised Rs10.733bn for 10-year PIBs with a cut-off yield of 12.95pc. The government also raised Rs24.5bn through non-competitive bids.

Published in Dawn, September 15th, 2022