A new World Bank report has confirmed that the State Bank of Pakistan pumped $1.2 billion to defend a weakening rupee and also underlined that the government’s decision to impose regulatory duties would not solve the current account deficit problem. The $1.2 billion injection was equal to $1.2 billion annual oil facility that Pakistan secured from Saudi Arabia this week. The WB attributed the rupee depreciation to widening trade deficit, downgrading Pakistan’s stock market by MSCI, increasing likelihood of global monetary tightening and the Afghan crisis. Due to strengthened domestic demand, imports have grown much higher than exports in recent months, leading to a large trade deficit, the WB said. Pakistan’s import bill is not particularly large when benchmarked against comparator countries, nor is its composition tilted towards luxury or even consumer goods.

Source: The Express Tribune October 29, 2021 21:51 UTC