Rupee falls to 2.5-month low on local, global economic headwinds

Currency dealers exchanging Rs1,000 note. — AFP/File
Currency dealers exchanging Rs1,000 note. — AFP/File
  • Rupee settles at Rs178.13 against the greenback.
  • Currency dealers expect rupee to hold ground this week.
  • Local unit has depreciated by 13.06% since July 1, 2021.

KARACHI: The rupee fell to an almost two-and-a-half-month low of 178.13 against the US dollar in the interbank market on Monday as investors and companies rushed to cover a shortage of the US currency.

The local currency settled at Rs178.13 against the greenback compared to its last close of Rs177.50 against the US currency a day earlier.

Currency dealers expect the rupee to hold ground in the inter-bank market against the US dollar this week, as traders await clues on monetary policy due tomorrow (March 8).

After posting a fresh decline of 0.35%, the Pakistani rupee has depreciated by 13.06% (or Rs20.59) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.

The rupee had maintained a downward trend for the past ten months. It has lost 16.98% (or Rs25.86) to date, compared to the record high of Rs152.27 recorded in May 2021.

The currency dropped to an all-time low of Rs178.24 against the greenback on December 29, 2021.

Investors are also closely monitoring developments regarding the International Monetary Fund (IMF) review.

Pakistan and the IMF kick-started virtual parleys on March 4 for the completion of the seventh review under the Extended Fund Facility (EFF), where the PM’s relief package and granting another tax amnesty for the industrial sector will be major thorny issues between the two sides.

Traders also reacted to the outcome of the plenary session of the Financial Action Task Force (FATF) where the international watchdog once again retained Pakistan in its grey list.

“There are many factors, which can determine the rupee’s future course such as the high current account deficit due to skyrocketing global commodity prices caused by geopolitical tension, fast-declining foreign exchange reserves, and evolving political crisis in the country,” said a currency dealer.

He said the central bank’s monetary policy decision is being the key factor for setting the rupee direction.

The SBP’s assessment of the country’s economic outlook in the wake of the Russia-Ukraine war will also be of significance for the investors.

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