A trader can be seen counting the US currency. — AFP/File

Rupee falls for second consecutive session, closes at Rs217.6 against dollar

by Pakistan News
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A trader can be seen counting the US currency. — AFP/File

KARACHI: The Pakistani rupee on Tuesday continued its decline for the second consecutive session against the greenback in the interbank market and closed at 217.66 amid the shortage of the currency in the country.

The local unit lost Re1 against the greenback in the interbank market following the currency crunch, which according to analysts is taking place due to the new rules imposed by the United Arab Emirates, smuggling, and the lifting of the import ban.

The UAE has made it mandatory for Pakistani travellers to declare 5,000 dirhams at the airport when landing — leading to an increase in the price of the US dollar in the open market.

Economist and former adviser to the federal ministry of finance Dr Khaqan Hassan Najeeb said the rupee is slipping not only because of the global strengthening of the dollar but also due to recent political developments, causing jitters in the market.

He also cited depleting foreign reserves held by the State Bank of Pakistan (SBP) as a reason for the fall. Forex reserves stand at $7.8 billion — hardly enough for over a month of imports.

Exchange Companies Association of Pakistan (ECAP) General-Secretary Zafar Paracha told Arab News that the local unit’s fall — among other reasons — was due to its smuggling to Afghanistan, where sellers get higher rates.

Apart from this, the government’s decision to lift the ban on the import of non-essential and luxury goods to meet a condition of the International Monetary Fund (IMF) is also gradually increasing the pressure on the rupee.

The ban was scrapped ahead of the Fund’s executive board meeting, scheduled to take place in Washington on August 29, where Pakistan’s request for the loan programme resumption will be taken up.

The market, however, seems to have failed to respond to the development of funds due from Qatar.

In a briefing, Deputy Governor State Bank of Pakistan (SBP) Murtaza Syed said that Pakistan’s funding gap of $4 billion will be fulfilled through $2 billion funds from Qatar, $1 billion from Saudi Arabia, and a similar amount from the UAE.

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