Pakistani currency maintained its downtrend for the fourth consecutive day on Thursday but it resisted larger losses, signalling that the market would stabilise around Rs280 against the US dollar in inter-bank dealings.
According to State Bank of Pakistan’s (SBP) data, the rupee posted a fresh drop of 0.07%, or Rs0.21, and closed at a new one-week low at Rs280.09 against the greenback.
The currency has cumulatively lost about half a percentage point, or Rs1.28, in the past four days.
Market belief that the rupee was losing ground on higher demand for the greenback proved true as the central bank’s foreign exchange reserves decreased $220 million to $7.5 billion, according to the latest weekly update released on Thursday.
The uptick in demand for the US dollar and the downtick in foreign currency reserves came after the government let foreign companies send profits and dividends to their headquarters abroad.
The move has mounted pressure on the rupee but at the same time it has sent a strong signal to global investors that there are no restrictions on profit repatriation and they can initiate new investment projects in Pakistan, which will eventually pave the way for fresh inflows in the country.
Market talk suggests that the demand for dollars surpassed their supply because the foreign currency was required to pay for imports and repay foreign debt.
Latest trends indicate that the output of large-scale manufacturing (LSM) industries and agriculture sector has gone up, meaning that they are consuming more imported raw material.
In open market, the rupee remained unchanged at Rs282/$ for the second consecutive day, according to the Exchange Companies Association of Pakistan.
Meanwhile, the local gold pricing body revised up bullion price by Rs2,900 to Rs211,350 per tola (11.66 grams) partly in line with the uptrend in the global commodity market.
The All Pakistan Saraf Gems and Jewellers Association reported that the precious metal surged $20 to $1,990 per ounce (31.10 grams) in the London market. Besides, the rupee depreciation and uptick in gold demand forced the pricing committee to revise up the rate.
Published in The Express Tribune, October 27th, 2023.
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