- The rupee closes at Rs166.98 against the US dollar in the inter-bank market.
- Currency market reacted to dismal trade data that widened 133% in August.
- The currency has plunged around 10% since May.
KARACHI: The rupee depreciated by around 11 paisas or 0.07% against the US dollar in the inter-bank market on Thursday, closing the day at Rs166.98 on the back of pressures from the external side.
According to the State Bank of Pakistan (SBP), the local currency had closed at Rs166.87 against the greenback on Wednesday.
The rupee today extended its decline for the fourth consecutive session on the back of a widening trade deficit, which reached $4.05 billion in August against $1.74 billion over the corresponding month last year.
With pressure on the external side, the currency has plunged around 10% since May.
Speaking to Geo.tv, Pak-Kuwait Investment Company Head of Research Samiullah Tariq said: “The currency market reacted to the increasing trade deficit, which widened 133% to $4.05 billion in August.”
The analyst said that the trade deficit impacted the currency market negatively. Moreover, the central bank has adopted a policy of not utilising inflows from borrowings to support the exchange rate, which created additional pressure.
“Going forward, if the current account posts another deficit of over $773 million — which was recorded last month — the currency will lose more ground against the US dollar,” he said.
According to a basket of 13 currencies compiled by Bloomberg, the Pakistani rupee was the worst performer in Asia.
Earlier, Sustainable Development Policy Institute Head of Policy Solutions Sajid Amin said that the high volatility of the Pakistani rupee and recent depreciation “is nothing to worry about”.
“It is a good sign that SBP has reduced its intervention in the market to keep the rupee artificially strong. The policy must continue.”