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Rupee continues fall amid depleting foreign exchange reserves

The Pakistani rupee has continued its fall in the interbank market as it reached Rs217.66 against the dollar on August 23.

According to the State Bank of Pakistan (SBP), the rupee closed at 217.66 per dollar on August 23 against the previous day’s close of 216.66 showing net depreciation of 0.46 percent.

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According to analysts, the new rules imposed by the United Arab Emirates (UAE), smuggling of dollar and lifting of the import ban have been causing the local currency to lose against the greenback.

According to new rules imposed by the UAE, it has become necessary for the Pakistani travellers to declare 5,000 dirhams at the airport, that has caused an increase in the price of US dollar in the open market.

Dr. Khaqan Hassan Abbasi, former advisor to the finance ministry, said to local media that dollar had been strengthening globally and that impact along with recent political developments in the country has been causing the rupee to slip.

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He also said that the declining foreign reserves of the SBP were also a cause of depreciation of rupee. The foreign reserves of Pakistan now stand at $7.8 billion, that are hardly enough for one month of import needs of the country.

According to Zafar Paracha, general secretary of Exchange Companies Association of Pakistan (ECAP), the dollar was being smuggled to Afghanistan where sellers get higher rates.

Paracha also said that the pressure on rupee also increased after government lifted ban on import of luxury and non-essential items.

The lifting of imports ban was in order to meet the condition of the International Monetary Fund (IMF), according to reports. The ban was lifted just ahead of IMF’s meeting scheduled for August 29 in which Pakistan’s request for loan resumption would be taken.

SBP Deputy Governor Murtaza Syed has said that the funding gap of $4 billion will be fulfilled through $2 billion funds from Qatar, $1 billion from Saudi Arabia, and $1 billion from the UAE.

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