Pakistan's rupee continued to sustain losses against the US dollar for the sixth successive session, settling with a depreciation of 1.21% on the last trading day of the week as expectations of a wider trade deficit kept the currency under pressure.
As per the State Bank of Pakistan (SBP), the rupee closed at 228.18 after declining by Rs2.76 against the greenback. During the six trading sessions, the rupee has cumulatively declined by Rs9.58 or 4.2% against the US dollar.
On Thursday, Pakistan's rupee had sustained a fifth successive loss to settle at 225.42 after depreciating 0.82% or Rs2 against the greenback.
The fall comes despite total liquid foreign exchange reserves held by the State Bank of Pakistan increasing by $1.103 billion to $8.799 billion during the week ended September 2, 2022.
Analysts say that while an improvement in the country’s liquidity position should strengthen the local currency, import payments and a stronger dollar will continue to keep the rupee under pressure.
“There has been an increase in imports, as demand for several goods including food items has risen after floods,” Samiullah Tariq, Head of Research at Pak Kuwait Investment, told Business Recorder.
“Moreover, dollar is strengthening globally. It is a combination of these two factors pulling the rupee downward,” he added.
The market expert was of the view that the situation would improve as Pakistan receives inflows in the form of flood aid, which will ease pressure on the local currency.
Globally, the dollar took a breather from its surging rally on Friday as markets digested yet more hawkish Fed speak, while the euro hung on to parity, helped by an outsized rate hike from the European Central Bank.
The US dollar index was down 0.25% to 109.25, just off a 20-year top of 110.79.
Meanwhile, oil prices, a key determinant of currency parity, rose on Friday supported by real and threatened cuts to supply, although crude was set for a second weekly decline as aggressive interest rate hikes and China’s COVID-19 curbs weighed on the demand outlook.
Inter-bank market rates for dollar on Friday
BID Rs 228.50
OFFER Rs 229.50
Open-market movement
In the open market, the PKR lost 1.50 rupees for both buying and selling against USD, closing at 232.50 and 234.50, respectively.
Against Euro, the PKR lost 3 rupees for both buying and selling, closing at 232 and 234 respectively.
Against UAE Dirham, the PKR lost 80 paisas for both buying and selling, closing at 63.50 and 64.10, respectively.
Against Saudi Riyal, the PKR lost 30 paisas for both buying and selling, closing at 61.50 and 62, respectively.
Open-market rates for dollar on Friday
BID Rs 232.50
OFFER Rs 234.50