Despite dwindling forex reserves and uncertainty about the IMF loan programme, the Pakistani rupee held its ground against the mighty US dollar in the interbank trade on Friday. According to the data received from the forex traders, the local currency was appreciated by 13 paisas against the greenback and was currently being traded at Rs285.25. On Thursday, the Pakistani rupee edged up against the US dollar in the interbank business. The local currency was appreciated by nine paisas against the greenback and ended the day at Rs285.38.

Though the interbank market was dull but the odds were different in the open market, where the Pakistani rupee had witnessed a significant appreciation against the US dollar on Thursday. The US dollar was traded in the range of Rs295-300 in the open market, as compared to 311-314 a day ago. However, multiple currency dealers complained that the dollar remained in short supply, saying customers were not approaching the market to sell their bucks. Separately, the dealers conveyed that the Saudi Riyal remained unavailable ahead of Hajj requirements.

The open market development came “after the State Bank of Pakistan allowed credit/debit card payments (to be settled) through banks.” The SBP on Wednesday allowed authorised dealers of foreign exchange to purchase US dollars from the interbank market for settlement of card-based cross-border transactions with International Payment Schemes (IPS). Previously, as per the SBP directives, authorised dealers were allowed to purchase dollars from any exchange company from settlement of card-based cross-border transactions with IPSs such as Visa, MasterCard, etc.

However, now the SBP has decided to allow the greenback purchase from interbank for such payments to facilitate customers who were seeing a wider gap between the two currency markets. Foreign exchange reserves held by the State Bank of Pakistan had decreased by $102 million, clocking in at nearly $4.09 billion as of May 26. The overall number still stands at a critical level at around a month of import cover. Total liquid foreign reserves held by the country stood at $9.51 million. Net foreign reserves held by commercial banks clocked in at $5.42 billion. “During the week ended on May 26, 2023, SBP reserves decreased by $102 million to $4,090.7 million due to external debt payments,” said the SBP in a statement on Thursday. Last week, SBP’s foreign exchange reserves decreased $110 million to $4.2 billion.

Credit: Independent News Pakistan-INP