Rupee loses further ground, closes at 166.28

Currency has depreciated 8.4% since hitting high of 152.28 in May 2021

KARACHI:

Pakistani rupee depreciated Rs1.08 against the US dollar in the inter-bank market on Wednesday and closed at Rs166.28.

According to the State Bank of Pakistan (SBP), the local currency had closed at Rs165.2 against the greenback on Tuesday.

In a statement, Arif Habib Limited Head of Research Tahir Abbas said that Pakistani rupee closed at the lowest level since September 21, 2020.

“With the latest drop, the local currency has depreciated 5.3% since June 2021 and 8.4% since hitting a recent high of 152.28 against the US dollar on May 14, 2021,” said Abbas.

The rupee had dropped to a record low of Rs167.43 to the greenback in August 2020.

Apparently, the authorities are letting the rupee depreciate to discourage rising imports and encourage exports in an attempt to narrow down the widening trade deficit, which poses a threat to the country’s economy.

More importantly, the rupee may be moving down in search of the value that can help resume the International Monetary Fund’s (IMF) $6 billion loan programme, which has been on hold for the past two months. The country is set to hold staff-level talks with the IMF on resuming the programme next month, ie September 2021.

Published in The Express Tribune, August 26^th, 2021.

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