Dollar smuggling pushes rupee to 276.28
Overall liquid foreign currency reserves held by the country stood at $16,149.8 million. PHOTO: FILE
As currency smuggling mounted pressure on the rupee, the volatile local currency failed to sustain an uptrend on the second consecutive day, dropping 0.35% (or Rs0.98) to Rs276.28 against the US dollar in the interbank market on Tuesday.
Reports suggest that the authorities concerned have failed to control the smuggling of US dollars to Afghanistan and this has continued to drain Pakistan’s foreign exchange reserves. Currently, Kabul is relying heavily on smuggled currency to survive in the world. Surprisingly, however, the Afghani currency has managed to appreciate as compared to its Pakistani counterpart.
Bloomberg reported that “Over the past 12 months, Afghanistan’s currency is among the world’s best performing while Pakistan’s (currency) is among the worst.”
The Afghan currency has appreciated by 5.6% compared to a 36.6% depreciation in the Pakistani rupee in the last 12-months, according to data.
Exchange Companies Association of Pakistan (ECAP) General Secretary Zafar Paracha explained that, “The black currency market continues to exist and smugglers are selling around $5 million a day to the Afghans.”
According to a report released by Arif Habib Limited, the rupee will continue to remain volatile in the short term. It will, however, stabilise once Pakistan secures the International Monetary Fund (IMF) review and other bilateral and multilateral flows start pouring in.
“Given the significant deterioration witnessed in the external reserves position and repayments of over $2 billion in commercial debt previously anticipated to be rolled over, we now expect the rupee-dollar parity to close at Rs275/$ by the end of June 2023 and Rs290/$ by the end of December 2023,” it added.
Published in The Express Tribune, February 8th, 2023.
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