Rupee falls as import pressure mounts

SBP governor, however, says import growth will remain moderate in FY24

KARACHI:

Pakistani rupee edged down 0.07%, or Rs0.19, to Rs286.64 against the US dollar in the inter-bank market on Monday, ending its two-day winning streak.

Market talk suggested that increasing imports continued to mount pressure on the rupee as demand for the dollar stood high for purchases from overseas markets.

At a press conference held to announce the monetary policy on Monday, State Bank of Pakistan (SBP) Governor Jameel Ahmad said that the growth in imports would remain moderate in current fiscal year 2023-24 owing to estimated modest economic growth in the range of 2-3%.

He, however, clarified that there were no restrictions on imports and commercial banks were free to provide funds for goods import. “Bank customers can go to another bank in case a bank does not provide the required financing.”

Ahmad stressed that the rupee-dollar exchange rate was being determined by market forces considering the demand and supply of the greenback.

“Market-determined exchange rate will continue to serve as the first line of defence against external shocks and support the building up of reserves.”

In the open market, the rupee closed unchanged at Rs291 against the greenback on a day-on-day basis, reported the Exchange Companies Association of Pakistan (ECAP).

In the prior two working days, the currency had gained 0.72%, or Rs2.07, to Rs286.45 against the dollar in retail dealings after the central bank permitted currency dealers in the open market to import 50% of US dollars in cash against the export of other foreign currencies which were in surplus.

The remaining 50% was to be imported through online transactions directly into the bank accounts of dealers.

Meanwhile, in line with the global trend, the gold price dropped Rs2,500 to Rs222,200 per tola (11.66 grams). In the international market, the precious metal decreased $16 to $1,959 per ounce (31.10 grams).

 

Published in The Express Tribune, August 1^st, 2023.

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