- Uncertainty regarding ongoing IMF talks, increase in demand from importers drag down currency.
- Analysts expect the rupee to trade in the 171.25-171.55 range during the week.
- Traders are closely monitoring the development around the IMF talks.
KARACHI: The rupee depreciated by an additional 0.4% or Rs0.69 against the US dollar on Wednesday and closed at an all-time low of Rs173.47 in the inter-bank market.
According to data released by the State Bank of Pakistan (SBP), the rupee closed at 172.78 on Monday.
Shedding light on the reason behind the decline, Pakistan-Kuwait Investment Company Head of Research Samiullah Tariq told Geo.tv that the demand for dollar is high as outflows for imports exceed inflows from remittances and exports.
“As the exchange rate is now flexible, higher demand is resulting in increased parity rate,” the analyst added.
With a fresh decline of 0.4%, the rupee has depreciated 10.11% (or Rs15.93) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.
Moreover, it has cumulatively dropped 13.92% (or Rs21.2) since its recent high of Rs152.27 against the greenback recorded on May 14, 2021.
Last week, speaking at the launch of the Kisan Portal, Prime Minister Imran Khan said that the pressure on the Pakistani rupee is temporary and claimed it will be over soon.
Economists say that the main behind the constant depreciation of the rupee is Pakistan’s current account deficit — which clocked in at $1.1 billion in September 2021 — and the International Monetary Fund’s (IMF) demand for further devaluation of the rupee.
Earlier, some traders said that the rupee is expected to remain under pressure against the dollar during the ongoing week due to foreign currency demand from importers and the impact of high crude oil prices.
They expect the rupee to trade in the 171.25-171.55 range during the week as traders are closely monitoring the development around the IMF talks.
It is pertinent to mention here that the free fall of the rupee came since the government ended its control of the exchange rate under the IMF condition and let market forces determine the rupee-dollar exchange rate keeping in view the demand and supply of the foreign currency.