The Pakistani rupee underwent another fall on the opening day of the week, closing in on the 166 level against the US dollar in the inter-bank market on Monday, and nearing a 12-month low.

As per the State Bank of Pakistan (SBP), the PKR closed at 165.96 against the dollar, a decline of Rs0.34 or 0.20%.

The rupee last closed at over 166 against the US dollar in September last year. Since then, the currency gradually appreciated to touch the 152 level in April 2021 before reversing the trend.

Since July alone, the rupee has depreciated over 5% against the dollar with the fall coming on account of heavier import payments, timing difference between foreign exchange flows (mostly trade-related) and Dollar Index movement.

Pakistani rupee posts further gain against US dollar

Pressure on the rupee has increased due to Pakistan's current account deficit that has widened in recent months due to the high import bill. According to provisional foreign trade figures, during the first month of the current fiscal year (2021-22), country's goods import payments increased significantly by 51% to $5.396 billion in July 2021 compared to $3.557 billion July 2020.

Pakistan's current account posted a $773-million deficit during the first month of the current fiscal year (FY22) due to the higher import bill.

The value of the rupee is significant since it forms part of the inflationary pressures on the country.