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Markets

Against USD: Fall of Pakistan's rupee continues

  • Currency ends at 170.66, registers seventh successive fall in inter-bank market
Updated 30 Sep, 2021

The downward trajectory of Pakistan's rupee continued against the US dollar, as the PKR recorded yet another all-time low of 170.66 in the inter-bank market on Thursday.

As per the State Bank of Pakistan (SBP), the rupee lost another 18 paisas or 0.11% day-on-day, falling for the seventh successive time against the dollar in the inter-bank market. On Wednesday, the rupee closed over the 170 level for the first time.

The widening current deficit, led by excessive growth in imports, has weakened the local currency, which has lost nearly 11% since its recent high in May 2021.

Fitch expects Pakistani rupee to weaken further in 2022

Taking note of the situation, Fitch Ratings also revised down its forecast for the PKR for both this year and next due to a variety of factors including an increased flow of US dollars into neighbouring Afghanistan, amid the takeover by the Taliban.

Fitch in its latest report forecasted that the rupee's average rate this year is now 164 to the USD compared with 158 previously. For 2022, Fitch now expects an average rate of 180 versus a previous forecast of 165.

"Our expectation for the currency to weaken further is based on Pakistan's worsening terms of trade, tighter US monetary policy, alongside the flow of US dollars out of Pakistan and into Afghanistan," it said.

On the other hand, the SBP has increased efforts to arrest the rupee decline. The measures included mandating banks to share a five-day schedule of upcoming import payments, revising it upwards from the earlier two-day directive, and directing them to seek permission for imports that are valued at $500,000 per transaction, cutting in half the original payment ceiling of $1 million.

Fitch, however, said that the undervaluation of the Pakistani rupee on a real effective exchange rate basis would limit excessive weakness in the currency.

Open-market movement

The PKR lost one rupee for both buying and selling against the USD, closing at 172.50 and 173.50, respectively, keeping the spread of one rupee intact.

Against the Euro, the PKR remained unchanged for both buying and selling, closing at 199.50 and 201, respectively.

Against the UAE Dirham, the PKR lost 10 paisas for both buying and selling, closing at 48 and 48.20, respectively.

Against the Saudi Riyal, the PKR lost 15 paisas for both buying and selling, closing at 45.80 and 46, respectively.

Open-market rates for dollar on Thursday

BID Rs 172.50

OFFER Rs 173.50

Comments

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Amir hussain Oct 03, 2021 05:18am
New pakistan ki mhebani hai k pakistani rupees girta ja rha hai or pak army khamosh hai
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Umar Sarwar Oct 07, 2021 11:59am
@Amir hussain Is Me Pak Army Kiya Kr SkTi Political Issue He Ye
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