There was no respite for the Pakistani rupee as it fell by a further Rs0.59 against the US dollar on Wednesday and closed at an all-time low of Rs170.48 owing to widening imports and slowdown in foreign currency receipts.
According to the State Bank of Pakistan (SBP), the local currency had closed at Rs169.97 against the greenback on Tuesday.
A report of Arif Habib Limited stated that the rupee had depreciated 10.68% since touching recent high of Rs152.28 on May 14, 2021 and 7.59% since the start of ongoing fiscal year on July 1, 2021.
Speaking to The Express Tribune, Intermarket Securities Head of Research Saad Ali stated that the rupee downtrend persisted due to a host of factors.
He said that increase in remittances and exports could not match the jump in imports and as a result pressure built on the rupee day after day.
READ The rupee slide
“Besides, the central bank is not intervening in the market to arrest the currency’s fall,” he said. “Moreover, inflows through the Roshan Digital Accounts are slowing down, adding to pressure on the rupee.”
The decrease in the rupee’s value also came in the wake of no new inflows in the form of Eurobond or Sukuk issue, he said. Basically, there was nothing to match the import growth and it was the main reason behind the decline, Ali added.
The State Bank increased the benchmark policy rate to 7.25% a few days ago and it was expected to help contain the import bill but the impact would be visible with a lag, he stressed.
The research head projected that the rupee would regain some lost ground in the next few days.
AA Gold Commodities Director Adnan Agar said that there were rumours in the market that dollars were entering Afghanistan from Pakistan in huge quantities due to which the rupee was falling.
Arif Habib Commodities Managing Director and CEO Ahsan Mehanti underlined the need for central bank’s intervention to halt the rupee’s decline.
Published in The Express Tribune, September 30th, 2021.
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