HomeBusinessState-owned banks record $4.2 billion in market purchases

State-owned banks record $4.2 billion in market purchases

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ISLAMABAD: The central bank has so far purchased a record $4.2 billion from the market during the current fiscal year. This represents half of the country’s official foreign exchange reserves. and more than the size of the International Monetary Fund’s rescue package. The bank’s intervention stabilized foreign exchange reserves at $8 billion, despite large loan repayments. But it has played a key role in keeping the rupee value as low as 278 rupees per dollar. According to analysts, These in the absence of intervention The value should be less than 250 rupees per dollar. The central bank refrained from answering questions about buying and selling foreign currency. It concealed a massive intervention in the interbank market involving transactions of more than 1.1 trillion rupees to purchase at least $4.2 billion. It is rare for central bank purchases to exceed the size of a $3 billion IMF program. One reason for joining an IMF program is to obtain additional loans and increase reserves. But so far the country has received $9.7 billion in foreign loans to cover foreign debt payments and the current account deficit. Ashfaq Yusuf Tola, a chartered accountant and former The chairman of the Revenue and Resources Mobilization Commission said that because of the central bank’s purchases The rupee depreciated by 40 to 45 rupees per dollar. As a result, the inflation rate decreased. Rupee to Dollar to Rs 235 by ending market intervention Reducing the inflation rate by 5% will also reduce interest rates. But the official argument is that If the central bank doesn’t buy dollars Foreign exchange reserves will also fall to $3.5 billion. There will also be an increase in inflation. Ashfaq Tola said the depreciation of the rupee to Rs 278 means exporters will get Rs 35 to Rs 45 more for every Rs. dollars of their export earnings. At least once again a new $6 billion IMF program is needed. And the central bank’s purchases in less than 10 months are equivalent to 70 percent of the three-year project’s volume. There was a failure to secure an inflow of $6 billion due to Eurobonds and foreign commercial loans. According to information published by The Economic Affairs Department and Central Bank of Pakistan had $9.7 billion in foreign loans in the first nine months, which is slightly more than 50 percent of the annual budget estimate. Exchange rate (REER), which is the value of a currency. Compared to the weighted average of several foreign currencies, the measure rose to 104.07 in March 2024, indicating that the rupee has not weakened.

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