Rupee depreciates to 5-week low

Pakistan hits five-week low against greenback, closes at Rs278.48

KARACHI:

Pakistani currency on Thursday hit a five-week low at Rs278.48 against the US dollar in the inter-bank market, maintaining its downward trend over the past one month amid speculation about lower supply of the foreign currency and an uptick in its demand in the market.

According to the State Bank of Pakistan’s (SBP) data, the rupee shrank 0.03%, or Rs0.09, and closed at Rs278.48 against the greenback.

It has cumulatively dropped 0.52%, or Rs1.45, in the past one month as compared to the five-and-a-half-month high close of Rs277.03/$ reached in the last week of March 2024. The downtrend indicates that foreign currency demand for import payments has remained higher than its supply. Recent trade data showed that Pakistan’s imports were gradually increasing, generating more demand for dollars in the banking system.

The rupee, however, has not appreciated mostly in the past one month despite favourable developments on the economic front such as a nine-year high current account surplus of $619 million reported by the central bank for March and stable foreign exchange reserves around $8 billion despite a major foreign debt repayment of $1 billion in the middle of April.

Exchange Companies Association of Pakistan (ECAP), however, reported that the rupee bounced back by 0.04%, or Rs0.13, on a day-on-day basis, closing at Rs279.69/$ in the open market. The slight rebound signals that the gap between demand and supply of the greenback has narrowed in the retail currency market.

Published in The Express Tribune, April 26^th, 2024.

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