The State Bank of Pakistan (SBP) stated on Sunday that the dollar cap, which was implemented to stabilise the rupee's exchange rate against the US dollar, did not cause a staggering loss to the national exchequer of $3 billion.

The government reduced the ceiling last week in an effort to address the market's dollar shortage, meet IMF requirements, and shut down black currency exchanges. This decision caused the rupee to plunge in the last two sessions.

Poor performance was shown by the local currency, which fell two days (Thursday and Friday) after devaluation, from 230.15 to 262.60 against the US dollar in the interbank market. Overall, the rupee's value versus the dollar dropped by Rs32, or 14%.

The dollar cap, according to financial experts, including former finance ministers Miftah Ismail and Dr. Hafeez Pasha, lost the nation's coffers between $1 and $3 billion because citizens preferred using illegal routes to move money home since they offered a better rate than official ones.

The central bank described the reporting of the losses as "incorrect" and pointed out that a variety of factors contributed to the decline un Pakistan's exports and worker remittances.

The bank said that the export of goods has been hampered by the moderating demand on global markets as the majority of our main trade partners are going through a phase of monetary tightening.

According to the bank, one indicator of a discernible global monetary tightening is the US Federal Funds rate, which has increased from 0.25% in March 2022 to 4.5% as of today.

In contrast, it claimed that inflation has been substantially higher in the industrialised world, reducing consumers' purchasing power.

"Exports have suffered as a result of them, as well as domestic issues like disastrous floods and the supply interruptions they caused. Given this context, it is inappropriate to attribute a dip in exports to a comparatively steady exchange rate."

The bank observed that after reaching an all-time high of $3.1 billion in April 2022 as a result of Eid-related flows, worker remittances were progressively declining.

According to the report, this fall is mostly attributable to the downturn in the global economy, since higher inflation in wealthy nations has increased the cost of living abroad and decreased the amount of surplus money that could be remitted home as remittances.

Additionally, some remittances have reverted back to FCY cash transfers via abroad Pakistanis travelling to Pakistan as international travel has resumed after COVID.

The central bank continued, "Therefore, it would not be reasonable to attribute it to the exchange rate simply. The drop in Pakistan's exports and remittances is a result of a mix of exogenous factors and local ones."