KARACHI: Pakistan’s currency continued to lose ground against the US dollar as the greenback closed the weekend trading session at Rs192.53 in the interbank market on Friday, traders and analysts said, with the equity market closing in the green zone.
Pakistani rupee has been depreciating since the start of the week due to dismal economic data, including growing trade deficit and dwindling foreign exchange reserves. The greenback has gained 6 percent, or Rs10.98, against the rupee in the interbank market since April 16, when it was trading at Rs181.55.
The US dollar breached the Rs193-level during Friday's session, before coming down to Rs192.53 by the close of the week, with analysts attributing it to easing of pressure on the rupee as the country’s central bank reported highest ever remittance inflows in the month of April.
“The sentiment was a little changed in favor of rupee after the central bank reported highest remittance inflows for April, which helped close the US dollar below Rs193,” Samiullah Tariq, a research director at the Pakistan Kuwait Investment Company, told Arab News.
Pakistan’s remittance inflows crossed the monthly $3 billion mark to reach $3.1 billion for the first time in April 2022, the State Bank of Pakistan said. The South Asian country has cumulatively received 7.6 percent, or $26.1 billion, higher remittances so far this fiscal year as compared to the previous year.
Higher remittance inflows have provided a little breathing space to the South Asian country, which desperately needs major foreign funding to cushion its depleting foreign reserves.
“The pressure will continue to build up on Pakistani rupee until the country receives major funds, including those from the International Monetary Fund (IMF),” Tariq added.
Pakistan and the IMF are currently negotiating the country's seventh review under the $6 billion Extended Fund Facility (EFF), which has so far disbursed $3 billion. Islamabad is expected to receive another $1 billion after the completion of the review.
The review has been stalled since the previous government announced in February around $1.7 billion relief in energy prices while deviating from objectives of the IMF program.
Though the incumbent government criticizes the move of former prime minister Imran Khan's government to grant the relief, it is reluctant to withdraw energy subsidies out of a fear of public outrage.
Pakistan’s equity market, on the other hand, closed bullish on Friday, with the benchmark KSE100 index gaining 588 points. The market closed at 43,486 points.
“Stocks closed sharply higher led by scrips across the board on bull run in Asian stocks and reports of $3.1 billion record home remittances in April,” Ahsan Mehanti, chief executive officer of the Arif Habib Corporation share-holding firm, told Arab News.
“Reports of ADB's (Asian Development Bank) likely approval of up to $2 billion additional support loan by December 2022, World Bank projecting 8 percent growth in remittance for FY23 and a surge in global crude oil prices played a catalyst role in the bullish close.”