Pakistani currency continued to depreciate for the third consecutive working day on Tuesday as it reached Rs279.31 against the US dollar in the inter-bank market.
According to State Bank of Pakistan’s (SBP) data, the rupee trimmed 0.02% of its value, or Rs0.05, against the greenback on a day-on-day basis.
Market talk suggests that exporters were charging a higher premium on US dollar sales on futures counters, which put the rupee under little bit of pressure. Otherwise, there was ample supply of foreign currency in the domestic market.
More importantly, the rupee has regained 10%, or Rs28, in the past five and a half months, hitting over four-month high at Rs279.11/$ late last week compared to the all-time low of Rs307.10/$ touched in the first week of September 2023.
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Financial experts said the significant recovery turned the rupee overvalued, which signalled that there was some room for depreciation in the near term.
They pointed out that the uptrend in international oil prices also played a role in the rupee weakness over the past three days as the development forced importers to pay a slightly higher price for the foreign currency.
The rupee has been fluctuating in a narrow band of Rs279-280/$ for over five weeks. In the open market, the currency remained stable at Rs282.05/$ for the second consecutive day, according to the Exchange Companies Association of Pakistan. With this, the disparity between rupee values in the two markets widened to Rs2.74 (almost 1%), about a quarter percentage point away from the maximum limit of 1.25% (around Rs4 at current levels) recommended by the IMF.
Published in The Express Tribune, March 6th, 2024.
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