The State Bank of Pakistan (SBP) is discouraging trading in the inter-bank market, asking commercial lenders to manage import-payment requests from their own inflows, such as exporter accruals and remittances, Bloomberg reported on Monday, citing people who asked not to be identified.
If the bank still needs to borrow, it must seek permission from the monetary authority, the report added.
The SBP did not reply to a query from Business Recorder on the matter.
The development comes as the rupee endured its worst weekly fall in over two decades, losing 7.6% during the previous week and falling further on Monday to hit a new record low. It was trading over the 230 level before market closed, with several people saying letters of credit were being opened at a premium. Multiple people Business Recorder reached out to during the previous week said importers were being quoted Rs238-240 to the US dollar.
The SBP's move to curb inter-bank trade is largely due to Pakistan's foreign exchange reserves falling under two months of import cover with latest data showing central-bank held dollars at $9.33 billion.
Moreover, reserves are also under pressure owing to import and debt repayments.
However, Finance Minister Miftah Ismail reiterated confidence that pressure on the rupee will decline.
In an interview with Radio Pakistan, the finance minister said pressure on the rupee is due to the political environment as well as the fact that import payments are being made for shipments from June.
“Import of $80 billion were made during the last fiscal year. We are still making payments for energy commodities purchased last month. Therefore, the rupee is under pressure. However, as we are importing less in July, its effect would be reflected from next month or, I should say, next week,” said the minister.
His statement follows that of SBP Acting Governor Dr Murtaza Syed who said Pakistan's $33.5-billion external financing needs are fully met for financial year 2022/23, adding that "unwarranted" market concerns about its financial position will dissipate in weeks.
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