Finance: Rupee’s recovery is temporary

From an all-time low of Rs276.58 a US dollar on February 3, the rupee gradually rose to 259.99 on February 24 — a recovery of 6 per cent — as crippling import restrictions remained in place. But it may come under renewed pressure in the April-June quarter. The external sector fundamentals are still too weak to lend lasting support to the local currency. The massive decline in the current account deficit from $2.467 billion in January 2022 to just $242 million in January 2023 must be seen in its correct perspective. In January 2023, Pakistan’s goods’ imports bill tanked to just $3.924bn due to massive restrictions, from $6.203bn in January 2022. In January 2022, the State Bank of Pakistan (SBP) had about $16.608bn in forex reserves, but in January 2022, it had less than 19pc of that — $3.11bn. This reduction in goods’ imports has made all the difference in the current account deficit. Hasn’t it? Forex-starved Pakistan had to curb imports right from the beginning of this fiscal year in July 2022. That reduced goods’ imports between July 2022-January 2023 to $33.452bn from $42.298bn in July 2021-January 2023, according to the SBP’s latest balance of payments data.