Pakistan's rupee continued to sustain losses against the US dollar for the seventh successive session, settling with a depreciation of 0.71% in the inter-bank on Monday as a shortage of greenback kept the local currency under pressure.
As per the State Bank of Pakistan (SBP), the rupee closed at 229.82 after declining by Rs1.64. During the last seven trading sessions, the rupee has cumulatively declined by Rs11.22 or 4.9% against the US dollar.
The rupee also had a woeful previous week, losing value in all five sessions for a cumulative fall of over 4% to close at 228.18 against the US dollar in the inter-bank market.
The depreciation was mainly attributed to expectations that Pakistan’s import bill would increase in the wake of devastating floods that have destroyed a considerable portion of crops, as well as the dollar’s global strength. However, many analysts also believe that other reasons are at play, including speculation and demand for foreign currency in the open market.
“The slip in the currency is being driven by strength in the US dollar and shortage of greenback in the market,” said AKD Securities in a note.
Rising expectations that Pakistan’s import bill would surge even as aid trickles in will likely keep the rupee under pressure.
The dollar index, which measures the currency against six major peers, was little changed at 108.82, holding close to those levels after falling back from a two-decade peak reached on Wednesday.
It dipped to the lowest since Aug. 30 at 108.35 in the previous session.
Investors are wary ahead of Tuesday’s US CPI report, even as Fed officials continued their hawkish rhetoric on Friday, the final day for such comments before a black-out period leading up to the Federal Open Market Committee’s deliberations.
Meanwhile, oil prices, a key determinant of currency parity, rose on Monday as Iranian nuclear talks appeared to hit obstacles and an embargo on Russian oil shipments loomed, with tight supply struggling to meet still robust demand.
Inter-bank market rates for dollar on Monday
BID Rs 230
OFFER Rs 231
Open-market movement
In the open market, the PKR lost 1.50 rupees for both buying and selling against USD, closing at 234 and 236, respectively.
Against Euro, the PKR lost 8 rupees for both buying and selling, closing at 240 and 242 respectively.
Against UAE Dirham, the PKR lost 2 rupees for both buying and selling, closing at 65.50 and 66.10, respectively.
Against Saudi Riyal, the PKR lost 2 rupees for both buying and selling, closing at 63.50 and 64, respectively.
Open-market rates for dollar on Monday
BID Rs 234
OFFER Rs 236