Pakistan's rupee hits new low, closes near 171
- Declines another 0.09% to close at 170.96 against the US dollar in inter-bank market
Pakistan's rupee reached a fresh low against the US dollar, closing near the 171 level in the inter-bank market on Wednesday.
As per the State Bank of Pakistan (SBP), the PKR closed at 170.96 against the USD, a day-on-day decline of 16 paisas or 0.09%. This is the weakest the rupee has been against the US currency, surpassing the 170.8 recorded earlier.
Pakistan has been battling a widening current account deficit and high import bill, with commodity prices at the international markets making it worse for the South Asian economy.
According to data released by the PBS on Monday, Pakistan's trade deficit widened by 100.6% to $11.7 billion during the first quarter (July-September) of the ongoing fiscal year compared with $5.8 billion in the same period of the previous year. Imports stood at $18.631 billion during July-September, a 65% increase year-on-year.
“The PBS data does have an impact on the rupee,” Tahir Abbas, Head of Research at Arif Habib Limited, told Business Recorder.
He said that the problem of import growth is further compounded by a record increase in commodity prices, especially oil. “Oil payments are a major component of our import bill, then comes food items and machinery,” added Abbas.
Pakistan's rupee stable at 170.8 against US dollar
Similar concerns were expressed by other experts, “Rising oil and gas prices in Europe are a big threat that is hurting our economy,” said Asad Rizvi, former Treasury Head-Chase Manhattan Bank, in a tweet post.
"Demand is due to unexpectedly fast improving Covid conditions and consumer shifting to cheaper oil from expensive gas that is equivalent of $205 a barrel."
On Wednesday, US crude rose to its highest level since 2014 but pared gains and was last off 0.15% to $78.81 a barrel. Brent crude lost 0.07% to $82.46 per barrel, having hit a three-year high in the previous session.
Meanwhile, Abbas said SBP measures to arrest the rupee decline would take time to take effect.
The SBP has recently introduced a string of measures including the imposition of a 100% cash margin requirement on import of 114 items, taking the total number to 525, revision of its Prudential Regulations (PRs) for consumer financing to moderate import and demand growth, and reducing the retention period of export proceeds with Authorised Dealers upon realisation from five to three working days.
Abbas said resumption of talks with the International Monetary Fund (IMF) would provide much-needed clarity.
Inter-bank market rates for dollar on Wednesday
BID Rs 170.90
OFFER Rs 171
Open-market movement
In the open market, the PKR gained 10 paisas for buying while remaining unchanged for selling against USD, closing at 171.70 and 172.20, respectively.
Against Euro, the PKR remained unchanged for both buying and selling, closing at 198 and 199.50, respectively.
Against UAE Dirham, the PKR remained unchanged for both buying and selling, closing at 47.80 and 48, respectively.
Against Saudi Riyal, the PKR gained 10 paisas for both buying and selling, closing at 45.40 and 45.60, respectively.
Open-market rates for dollar on Wednesday
BID Rs 171.70
OFFER Rs 172.20
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