The Pakistani rupee fall against dollar on Wednesday. It continued with its downward spiral and closed at a record low of Rs170.48 because of broadening imports combined with the slowing down of foreign currency receipts.
The State Bank of Pakistan (SBP) said the rupee had closed at Rs169.97 against the dollar on Tuesday.
Arif Habib Limited issued a report that says the local currency has depreciated 10.68% since it touched a recent high of Rs152.28 on May 14, 2021. It has already witnessed a devaluation of 7.59% since the beginning of the current fiscal year from July 1, 2021.
Head of Research at Intermarket Securities Saad Ali said that there are multiple factors causing the consistent downtrend in the Pakistani currency.
He added that the surge in imports is too large for the increasing remittances and exports to match which is leading to mounting pressure on the local currency on a daily basis.
Ali added, “Besides, the central bank is not intervening in the market to arrest the currency’s fall. Moreover, inflows through the Roshan Digital Accounts are slowing down, adding to pressure on the rupee.”
Stating the inability to match imports as the primary reason behind the rupee’s devaluation, he said that there have been no new inflows in the form of Eurobond or Sukuk issue either to help with the current situation.
Ali explained that recently, the central bank announced its decision to hike the benchmark policy rate to 7.25% in hopes that it would help curtail the swelling import bill but the impact of this change in policy rate would be visible with a lag. He projected and expressed hopes that the rupee will gain back some of its lost footings in the coming days.
Director at AA Gold Commodities Adnan Agar said that rumors regarding the floating of dollars in huge quantities from Afghanistan to Pakistan were circulating in the market which is further causing the devaluation of the rupee.
Managing Director and CEO at Arif Habib Commodities Ahsan Mehanti highlighted that the State Bank of Pakistan would need to intervene to put a stop to the rupee’s decline.
