Pakistan's rupee continued to sustain losses against the US dollar for the 10th successive session, settling with a depreciation of 0.66% in the inter-bank market on Thursday, as investors await funding from friendly countries and international creditors.
As per the State Bank of Pakistan (SBP), the rupee closed at 235.88 after declining by Rs1.56. During the last 10 trading sessions, the rupee has cumulatively declined by Rs17.28 or 7.3% against the US dollar.
On Wednesday, Pakistan's rupee had sustained losses against the US dollar for the ninth successive session, settling with a depreciation of 1.02% at 234.32 in the inter-bank market as the dollar strengthened globally. At the same time, investors remained wary of a rising import bill.
The local currency has come under renewed pressure this month, which has been attributed to the strengthening US dollar index, alongside a rise in import of food-related items.
Economists list factors behind pressure on PKR
In a video message, Exchange Companies Association of Pakistan (ECAP) General Secretary, Zafar Paracha said the respite in rupee’s value, which came from International Monetary Fund (IMF) funding, was short-lived.
“Moreover, funding promised by friendly countries after the IMF programme resumption has yet to be realised,” he said, adding that floods have devastated the local economy and inflation could increase further.
Paracha informed that the gap offered in the open-market and inter-bank is reducing, after ECAP itself imposed a cap on the rates being offered.
Former finance minister Dr Hafeez Pasha, while talking to Business Recorder on Wednesday, had stated that smuggling of the dollar, increase in trade deficit, non-materialisation of funds from friendly countries as well as absence of investment have contributed to the ongoing pressure on the rupee.
“There has been no significant increase in foreign exchange reserves despite disbursement of $1.16 billion by the International Monetary Fund (IMF), which implies that the country has not yet received expected funds from friendly countries,” Dr Pasha said, adding that smuggling of the dollar and increase in trade deficit have exacerbated the problem.
Internationally, the dollar stood near recent peaks on Thursday as markets increased bets the Fed has more work to do in its aggressive tightening streak to curb red-hot inflation, while wariness of intervention kept the yen steady.
The US dollar index, which measures the greenback against a basket of currencies, was up 0.09% to 109.7, not far off its two-decade peak of 110.79.
Moreover, oil prices, a key determinant of currency parity, fell on Thursday as expectations of weaker demand and a strong US dollar ahead of a potentially large interest rate increase outweighed supply concerns.
Inter-bank market rates for dollar on Thursday
BID Rs 236
OFFER Rs 237
Open-market movement
In the open market, the PKR lost one rupee for buying and 2 rupees for selling against USD, closing at 239 and 241, respectively.
Against Euro, the PKR lost 2 rupees for both buying and selling, closing at 242 and 244 respectively.
Against UAE Dirham, the PKR lost one rupee for both buying and selling, closing at 67.50 and 68, respectively.
Against Saudi Riyal, the PKR lost one rupee for buying and 1.10 rupees for selling, closing at 64 and 64.50, respectively.
Open-market rates for dollar on Thursday
BID Rs 239
OFFER Rs 241