By Ariba Shahid
KARACHI, Pakistan (Reuters) – Pakistan’s current account deficit (CAD) dropped to $0.2 billion in January 2023, down 90% from last year as the rupee’s depreciation slowed down imports, the central bank said on Monday.
In less than a month, the cash strapped nation’s currency has lost more than a quarter of its value against the U.S. dollar after the removal of artificial caps, and fuel prices have risen by more than a fifth as the government implemented fiscal measures required to unlocking funds from an International Monetary Fund (IMF) bailout.
During the first seven months of the current fiscal year, the country’s current account deficit decreased by 67% to $3.8 billion, compared with a deficit of $11.6 billion during the same period last year.
“This monthly deficit is lowest after 25 months, and lower than expectations,” said Mohammad Sohail, CEO of Topline Securities. Sohail, citing the falling currency. The weaker currency has made imports more expensive, effectively slashing them.
Tahir Abbas, Head of Research at Arif Habib Limited said that imports under machinery group and transport group have gone down 47% and 61% respectively was primarily due to stringent administrative measures taken by the State Bank of Pakistan (SBP) in addition to the an economic slowdown.
(Reporting by Ariba Shahid in Karachi, Editing by Louise Heavens)