The Pakistani Rupee (PKR) continued its historic decline against the US Dollar (USD) once again and depreciated by 64 paisas against the greenback in the interbank market today. It hit an intra-day low of Rs. 177.50 against the dollar during today’s open market session.
Today, the local currency depreciated by 0.36 percent against the USD and closed at an all-time low of Rs. 177.43, following its loss of 30 paisas to close at Rs. 176.79 in the interbank market on Tuesday, 7 December.
The local currency has lost 11.01 percent on a calendar-year-to-date basis after recording another historic low today. On a fiscal-year-to-date basis, the Rupee has depreciated by 12.62 percent. Notably, the Rupee has depreciated by 43 percent (Rs. 53.38) since the incumbent government took charge, according to Capital Stake.
Another Rupee Spillover
The Rupee maintains its two-day losing streak against the dollar on the back of a widening trade deficit, amongst many other factors which have increased the demand for the US currency.
The Chairman of the Exchange Companies Association of Pakistan, Zafar Paracha, remarked that the increased demand for the dollar is “dangerous for the currency market.” However, with the issuing of the $1 billion Sukuk bonds, he was optimistic that the dollar’s supply would improve in the market and that its value against the Rupee would eventually diminish.
Paracha also called it a “bad day for Pakistan” since the local currency continued to take big hits regardless of boasting encouraging financial indicators such as Saudi Arabia’s $3 billion deposit, satisfactory forex reserves, positive inward remittances, and liveable foreign direct investments. Briefly commenting on fiscal progress, he lamented the country’s horrid trade deficit and blamed the import bill for motor vehicles for putting considerable pressure on the economy.
Even so, dollar demand has remained high since the beginning of the current financial year. Since July, the US dollar appreciated by 12 percent or Rs. 18.88 against the local currency.
Discussing his viewpoint on the matter with a national daily, the President of the Forex Association of Pakistan, Malik Bostan, opined that the continuous devaluation of the domestic unit could be a result of IMF conditions.
Although the PKR saw slight increases the day before yesterday, courtesy of a $3 billion deposit from the Saudi Development Fund (SDF), the exchange rally rapidly declined when market players learned of the fund’s stringent conditions, Bostan observed.
The former Treasury Head of Chase Manhattan Bank, Asad Rizvi, regarding the local unit’s tumble to another historic low, remarked, “Nervousness prevails in the I/B MARKET, as Rupee hovers around all-time low. It may have understood the logic of [the] supply-demand factor that determines the Rupee’s real value”.
Obviously, in the absence of SBP and with its softer approach, why would PKR stabilize or regain strength, he added.
The PKR maintained its declining trend against the other major currencies as well.
The local unit posted big losses of Rs. 1.26 against the Canadian Dollar (CAD), Rs. 1.07 against the Australian Dollar (AUD), and five paisas against the Pound Sterling (GBP). It also posted losses of 17 paisas against both the UAE Dirham (AED) and Saudi Riyal (SAR) in today’s interbank currency market.
The Rupee also declined against the Euro (EUR) and posted losses of 65 paisas against the eurozone currency.
Source: Pro Pakistani