KARACHI: The rupee may have depreciated only 0.24% in the inter-bank market, according to State Bank of Pakistan (SBP) data, but the simultaneous prevalence of a ‘black market’ and US dollar’s reported shortage with Exchange Companies (ECs) was a source of worry for customers and policymakers in the past week.

The rupee settled at 224.94 against the US dollar in the inter-bank market as foreign exchange reserves held by the SBP continued to stay at a four-year low, clocking in at $6.7 billion.

The market may find some solace from a lower current account deficit, which shrank to $0.28 billion in November 2022, according to data released on Friday. However, an inability to secure dollar inflows and the US Federal Reserve’s tightening stance together with stalled talks between Pakistan and the International Monetary Fund (IMF) are likely to keep pressure on the rupee.

Rupee remains under pressure against US dollar

At the same time, Finance Minister Ishaq Dar’s admission that dollars were being smuggled out of the country, along with a reported ‘premium’ to trading the foreign currency in the black market, will keep policymakers busy with renewed scrutiny on the rupee’s ‘artificial’ value in official markets.

Open-market rates

In the open market, the PKR lost 2 rupees for both buying and selling against USD, closing at 231.70 and 234, respectively.

Against Euro, the PKR lost 5 rupees for both buying and selling, closing at 256 and 258, respectively.

Against UAE Dirham, the PKR lost 1.50 rupees for both buying and selling, closing at 67.30 and 67.80, respectively.

Pakistan: where formal channels suffer, and 'grey' markets prosper

Against Saudi Riyal, the PKR lost 90 paisas for both buying and selling, closing at 64.30 and 64.80, respectively.

Copyright Business Recorder, 2022