KARACHI (TLTP): Pakistan rupee depreciated against the US dollar for the fourth straight week, down by 33 paisas (-0.19 percent) last week.
Though the rupee’s depreciation slowed in terms of value during the last week, it continues unabated steadily. According to the State Bank of Pakistan, the US dollar opened at Rs177.71 in the interbank market on Monday last and closed at Rs178.04 on Friday, the last working day of the week. Within the open market, the rupee was traded at Rs179-Rs181 per dollar during the week. During the last week, the rupee set three all-time new lows against the dollar against the preceding week when the number stood at four. Falling rupee depreciated against the dollar in the interbank market by 18 paisas (-0.10 percent) on Monday; however, it took a breather on Tuesday when it recovered the minimum possible amount i.e. one paisa. On Wednesday, the rupee shed 10 more paisas (-0.08 percent) but remained stable on Thursday. However, on Friday, the local unit shed 6 more paisas (-0.03 percent) to close the week against the dollar at 178.04.
The dollar hit the highest ever levels of Rs178.04 on December 17, Rs177.98 on December 15, and Rs177.89 on December 13 during the week. However, during the 13 sessions of the ongoing month, the Pakistani rupee has set nine all-time lows. The rupee’s depreciation during the ongoing fiscal year 2021-22 has been Rs20.29 and Rs17.56 in the current year 2021.
According to experts, pressure has mounted on the rupee in recent weeks, with everything now hinging on whether the government strikes a deal with the International Monetary Fund (IMF) over the release of new funds. To land the deal, a mini-budget is due in the next few days, which will presumably pave the way for an IMF agreement and the release of funds. It is expected to give the rupee some respite.
Apart from economic challenges, the geopolitical situation with Afghanistan has also weighed on the currency; however, there is optimism the current adjustments will finally pave the way for a broader recovery for the economy and the currency.
The one big positive in recent days has been the deal struck with Saudi Arabia whereby the country deposited $3 billion with the SBP. The rupee had to deal with debt repayments by the government, dollar reduction in the market, as well as inflationary pressures. This is why there is the added pressure in recent days.
According to currency dealers, the demand for the dollars for import and corporate payments remains usually high by the close of a calendar year. They said foreign entities operating in Pakistan send their profits and dividends to their parent companies abroad by the end of the quarter. Further, higher international commodity prices have also kept the demand for the dollar strong. TLTP