The rupee continued to decline in its value against the dollar in the interbank market on Tuesday, closing near an all-time low of 233 against the dollar.
According to the State Bank of Pakistan (SBP), the local currency, which had closed at Rs 229.88 yesterday, fell by Rs 3.05 to Rs 232.93 today. This equates to depreciation of 1.31 percent.
The rupee hit a new intraday low due to letter of credit (LC) payments for oil at a time when SBP was reluctant to release reserves to curb exchange rate volatility, said Saad bin Nasser, director of Metis Global.
“Moreover, exporters are more interested in earning windfall profits as it seems that they have abandoned the national interest in view of getting quick income from depreciation of rupee,” he said. don.com,
On the other hand, Naseer pointed out, exporters were using the maximum LC limit from banks.
“Any bank will tell you that exporters are currently using the ceiling for import LCs while they refuse to bring in dollars from export proceeds.”
He said the only way the government has to deal with the situation is to force exporters to convert their transactions from dollars to rupees on the same day their export shipments were dispatched, so that they do not continue with their transactions. Can you Dollar.
“At the same time, the SBP can act as an intermediary by swamping with banks so that the exchange rate can remain untouched by exporters’ dishonesty in times of crisis.”
He said exporters should focus on earning from the sale of their goods instead of running away from the exchange rate.
Komal Mansoor, head of strategy at Tresmark, said bank nostros — accounts that one bank holds in foreign currency at another bank — were down by about $600 million.
“Exporters have stood their dollar out and SBP is not providing any liquidity. Some banks are now opening new LCs only if the expected outflow matches the export earnings of the same customer,” she said.
Rupee continues to fall
Between April 7 (when then-prime minister Imran Khan was ousted from power) and July 22, the rupee depreciated 21.3 per cent against the US dollar due to a yawning trade deficit and rising political instability and uncertainty.
After touching 211.93 on June 22, the rupee had risen to Rs 204.56 in the first week of July. It continued to lose value against the dollar then, but registered a modest increase when the country reached its staff-level agreement with the IMF on July 15. ,
Since then it has continued to decline in every session.
Reading: Is the rupee too weak to recover?
Last week, the rupee lost 8.25 per cent of its value against the US dollar within a week: it closed at an all-time low of 228.36 per dollar on July 22, up from 210.95 per dollar on July 15.
The rupee fell further to Rs 229.88 in the opening session of this week.
More to follow.