Rupee closes at 10-month low against dollar

Pakistani rupee depreciated Rs0.45 against the US dollar in the inter-bank market on Monday and closed at a 10-month low of Rs163.9 owing to import payment pressure and slowdown in foreign currency receipts.

According to the State Bank of Pakistan (SBP), the local currency had closed at Rs163.45 against the greenback on Friday. A report of Arif Habib Limited stated that the rupee closed at the lowest level since October 7, 2020.

“Rupee has depreciated 3.9% in fiscal year 2021-22 to date and 7.1% since hitting its recent high of Rs152.28 on May 14, 2021,” it said.

Speaking to The Express Tribune, Intermarket Securities Head of Research Saad Ali said that fresh depreciation of the local currency came in the wake of increasing pressure of import payments amid a slowdown in remittances and inflows via the Roshan Digital Account.

Moreover, there is pessimism in the foreign exchange market because market talk suggests that the International Monetary Fund (IMF) will not resume the $6 billion loan programme until the government of Pakistan raises power tariff.

“Market sentiment matters in the foreign exchange segment and the outlook is weak at present,” he said. “People anticipate hurdles in the way of resumption of IMF package.”

Alpha Beta Core CEO Khurram Schehzad said that increase in imports coupled with an uptrend in international oil prices contributed to the decline in the rupee.

Moreover, large-scale import of machinery by businesses under the State Bank’s Temporary Economic Refinance Facility (TERF) further enhanced the pressure on the rupee. The machinery and equipment will be utilised by the companies to upgrade their units in the ongoing fiscal year.

Schehzad projected that the rupee would stabilise in a month’s time. The movement of the rupee in the open market followed a similar trend as the currency depreciated Re1 and closed at Rs164.95 against the greenback on Monday.

Published in The Express Tribune, August 10^th, 2021.

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