As per the State Bank of Pakistan (SBP), the rupee closed at 181.58 after a day-on-day appreciation of 11 paisas, or 0.06%. Last week, the local currency had recorded its biggest increase on a day-to-day basis in the inter-bank market in two years after it closed at 184.68.

In the last six trading sessions, the rupee has appreciated by 3.6%, a remarkable turnaround for a currency that had hit its record low last week.

“Pak rupee correction likely to continue,” said Asad Rizvi, former country head at Chase Manhattan, in a tweet.

The expert expressed concern over the ongoing depletion of the country’s foreign exchange reserves, owing to debt payments, as the import cover continues to diminish.

“SBP net reserves downward journey continues falling to almost half,” said Asad Rizvi, as compared to the $20.073 billion it reached in August 2021.

“Reserve building is tough due to widening of trade gap,” he said, adding that rising oil prices are a "spoiler". He also said that workers’ remittance is the “best source of capital and supports”.

Foreign exchange reserves held by the central bank fell another $470 million on a weekly basis to reach a critical $10.85 billion, revealed SBP on Thursday. This is the lowest reserve level since June 2020.

Total liquid foreign reserves held by the country stood at $17.03 billion as of April 8, said the SBP.

The development suggests that the rollover of a major syndicated loan facility from China has not yet happened.

Meanwhile, the central bank remains active in conducting open market operations (OMO), as it injected Rs3.169 trillion worth of liquidity into the money market on Friday.

This story was originally published in Business Recorder on April 15, 2022.