Rupee hits nine-month low at 163.35

Dip in interbank partly due to increase in domestic demand for foreign currency

KARACHI:

The Pakistani currency hit nine-and-a-half month low at Rs163.35 against the US dollar in intra-day trading in the interbank market on Monday partly due to increase in demand for the foreign currency in the domestic economy.

The rupee depreciated by almost Re1 (92 paisa) in the intra-day trading compared to Friday's (the previous working day) close of Rs162.43.

"The rupee is losing party due to increased pressure of import payments," Topline Securities Director Research Syed Atif Zafar said while talking to The Express Tribune.

On the other hand, the US dollar is also gaining strength against world currencies. "This is another reason for the drop in rupee."

"The local currency is estimated to fall to around Rs166-168 to the greenback by end-December 2021," he said.

He said that additional demand for dollars in the economy was being generated on the back of persistent uptrend in international petroleum oil prices. Pakistan heavily relies on imported energy.

The rupee has been on a decline since it hit a 22-month high value of Rs152.27 in March 2021.

It has been facing a downturn for the past week after the central bank announced that the current account deficit would widen to 2-3% of GDP in current fiscal year 2021-22 compared to 0.6% in FY21.

The drop would be seen on the back of surge in imports, it said.

Moreover, the fourth wave of Covid-19 in Pakistan is likely to take a toll on the economy.

The government of Sindh imposed a lockdown in the province on Friday for 15 days which partially impacted economic activities.