- Has cumulatively shed 3.4% since May 7
- Fall attributed to external debt repayments and imports
Karachi: The Pakistani rupee continued to weaken on Monday, closing at 157.51 to the dollar in the inter-bank market, and extending the fall to 3.4% in the last one-and-a-half months.
The rupee closed at 152.28 on May 7, but has continued to weaken since as increase in imports and high commodity prices weigh in on the South Asian economy.
The latest fall is also being attributed to an increase in imports, and the government's external debt repayments, but foreign exchange dealers maintain that this may be a 'temporary' downward movement.
Amreen Soorani, head of research at JS Global Capital, said the latest jump in the US dollar comes on the back of an increase in imports and scheduled government’s debt payments.
Pakistan’s imports have already crossed $50 billion in the first eleven months of the outgoing fiscal year with the trade deficit widening to $27.5 billion, revealed the latest data released by the Pakistan Bureau of Statistics (PBS). The deficit was higher by $6.4 billion or 30.6% over the same period of the previous year, showed PBS data.
Soorani said the country’s economy has been stabilizing, and the PKR has remained relatively stable.
She was of the view that the current spike could not be considered a ‘sharp increase’ as compared to what occurred during the consolidation phase in 2020 when USD was being traded at over Rs168.
Meanwhile, Zafar Paracha, former general secretary of the Exchange Companies Association of Pakistan (ECAP) and the owner of Paracha Exchange, said that as the current financial year comes to a close there is pressure on importers to fulfill their payments.
“Exporters are holding on to their dollars, leading to a demand-supply issue,” he told Business Recorder.
He said that the country’s overall economic position remains stable, with an increase in exports and forex reserves.
On the other hand, Malik Bostan, president of the Forex Association of Pakistan, was of the view that the recent spike has to do with reports regarding uncertainty of loans from the International Monetary Fund (IMF) and the Asian Development Bank (ADB).
He said the World Bank and other international lenders, taking a leaf out of IMF's book, could also delay their loans to Pakistan.
The SBP, in its Second Quarterly Report on “The State of Pakistan’s Economy” for the fiscal year 2020-21, had earlier expressed concern over debt payments.