The Pakistani rupee (PKR) continued its volatile trajectory as it fell into a downtrend on Wednesday against the greenback after successive gains previously. The local unit closed at 175.04 against USD.
According to the State Bank of Pakistan (SBP), the PKR depreciated by 74 paisas or 0.42%. Earlier on Tuesday, the rupee had settled at 174.30 against the greenback in the inter-bank market.
The dip comes following the back-to-back gains on Monday and Tuesday, appreciating by more than 0.5%. The gains came owing to the staff level agreement reached between Pakistan and the International Monetary Fund (IMF) bringing some much needed sense of direction.
The head of research and development at Pakistan Kuwait Investment Company (Private) Limited, Samiullah Tariq said, “The upward movement of PKR against the USD is due to supply-demand movement in the market, as the exchange rate is market-determined”.
Tariq added that the IMF announcement led to positive sentiment in the market, however, the economy is still battling the current account deficit (CAD), implying high demand for the dollar.
Previously in October 2021, the country’s current account deficit widened to $1.66 billion from a surplus of $448 million recorded during the same month in 2020. On a monthly basis, CAD widened 46% in comparison to $1.13 billion recorded during the previous month in September.
Tariq continued that the CAD for the next month is projected to be lower, amidst import-curtailing measures taken by the authorities, in order to ease pressure on the rupee.
He noted, “Furthermore, export figures are expected to improve on the back of an increase in cotton price. Measures taken by the government will take some time to reflect.”
