ISLAMABAD. Usually Pakistani rupee strenghthens when Pakistan ‘s forex reserves go up, but in recent weeks this trajectory has proven otherwise.
Pakistan’s forex reserves stood historic high , as State Bank of Pakistan (SBP) announcement said on Thursday that Pakistan’s forex reserves as on August 27, 2021 were recorded at $ 27.22 billion. This is for the first time in Pakistan’s history that its reserves scaled up to $ 27.22 billion. But one wonders how come Pak rupee was shedding its value so quickly when forex reserves were so robust.
The SBP, however, has clarified that Pakistan’s forex reserves jumped up to historic high of $ 27.22 billion as a result of incoming of $ 2.70 billion from the International Monitory Fund (IMF).
The IMF provided these funds of $ 2.70 billion to support Pakistan to overcome COVID – 19 negative impact on its economy. These funds are a part of the IMF special support provided to developing countries to help them pump in extra funds to stimulate their weakening economies.
Soaring of the forex reserves to a new high and at the same time weakening of Pak rupee is worrying many in the country.A dollar jumped up from Rs 157 to Rs 167 in the last two months.
NEWSMAN spoke to the goverment economic managers as well as a few independent economists to trace out what actually was playing to have an odd equation between dollar, rupee and soaring forex reserves of Pakistan.
Requesting anonymity, a senior official of the Finance ministry told NEWSMAN that the SBP was closely monitoring volitality in forex market and the Finance ministry was getting input on hourly basis on the issue. According to the official, Pakistan’s currency is under pressure due to a number of factors like crisis -like situation in Afghanistan and uncertainity in Pakistan’s market.
Dr Abid Suleri, executive director SDPI and a member of PM advisory committee, said dollar rate was increasing in Pakistan due to huge buying of dollar by Afghan nationals after unexpected and hurried evacuation from Afghanistan.
Dr Abid Suleri said “Pakistan economy will remain under pressure as long as uncertain situation in Afghanistan continues”.
Bostan Khan, president Pakistan money changers association , said ” I would say Afghan situation and rising trade deficit were two key factors behind dollar’s rising value”.
He added Afghan nationals who have Pakistani nationality and they in thousands, are buying dollar from Pakistani open market for import of necessary items like food items for keeping supplies intact in Afghanistan and its one factor that is pushing dollar vis a vis rupee up. Secondly, Pakistan imports in recent two months have gone up to $ 5.7 billion against exports of $ 2.7 billion showing a difference of $ 3 billion, he asserted. Sumiliarly, Mr Khan noted Pakistan’s remittances have also slowed down in recent months to put more pressure on rupee. Bostan Khan believes reduction in remittances was a routine matter and it would get momentum in coming months, but Pakistan has to enhance exports to plug in widening trade deficit to support rupee against USD.
Bostan Khan suggested that Pakistan should convert the crisis in Afghanistan into an opportunity and step in to increase exports to that country. He strongly believes Pakistan can increase its exports to Afghanistan up to 6 billion per annum by capturing its market. He also suggested that Pakistan should get into Afghanistan ‘s exploration and mining market to take benefit of huge natural assets of that country.
