Rupee depreciates as dollar strengthens globally

Pakistani rupee drops to Rs277.68 per dollar as global tensions rise, despite upcoming ADB and CPEC financial support.

KARACHI:

Pakistani currency depreciated Rs0.04 to Rs277.68 against the US dollar in the inter-bank market on Monday mainly due to strengthening of the dollar against other major currencies around the world, partially reversing the gains recorded on Friday.

According to the State Bank of Pakistan's (SBP) data, the rupee had risen Rs0.20 to Rs277.64 against the dollar over the weekend. Exchange Companies Association of Pakistan (ECAP) reported that the local currency ticked down Rs0.01 to Rs278.63/$ in the open market compared to Friday's value. Market talk suggests that improvement in the US economy helped its currency to strengthen, beating other major global currencies like the Chinese yuan. This development then impacted the Pakistani rupee as well.

Moreover, an escalation in geopolitical tensions, particularly in the Middle East after Israel attacked Iran on Saturday, as well as growing Israeli aggression in the region and the weakening of Chinese economic output were disturbing the global economy. The worsening situation adversely impacted the rupee and many other currencies.

The local currency, however, disregarded a number of key developments. For instance, the Asian Development Bank (ADB) announced plans to provide $2.7 billion over four years for budgetary support to Pakistan. Moreover, Finance Minister Muhammad Aurangzeb approached China for an additional loan of $1.4 billion in Chinese currency under a currency swap agreement. Reports also suggested an improvement in Chinese investment in Pakistan under the CPEC project.

Meanwhile, the price of gold dropped Rs900 to Rs283,400 per tola (11.66 grams) in line with the global trend.