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Markets

Rupee closes at 194.18 against USD, cumulative depreciation in one month hits 6.5%

  • Lack of clarity on economic policy and falling foreign exchange reserves as well as dollar's strength have contributed to currency's decline
Updated 16 May, 2022

Pakistan's rupee continued its downward slide on Monday as it closed at 194.18 in the inter-bank market, its weakest level against the US dollar, taking the currency's cumulative fall since April 16 to an astonishing 6.5%.

As per the State Bank of Pakistan (SBP), the currency depreciated Rs1.65 or 0.85% day-on-day.

In the previous week alone, the rupee lost 3.1% of its value against the dollar in the inter-bank market, with Pakistan’s currency hitting new record lows to end at 192.53 on Friday.

Riding into oblivion: Rupee closes at new historic low in inter-bank market

The rupee lost value in all five sessions, as worry increased over the state of the economy, falling foreign exchange reserves and a widening trade deficit. The market has also been in panic and speculation mode over uncertainty around the International Monetary Fund (IMF) programme.

IMF to initiate staff mission with Pakistan in Doha on 18th

Additionally, Finance Minister Miftah Ismail on Sunday said that the government has decided not to increase petroleum prices for now but did not rule out adjustment in days ahead owing to sharp increase in crude oil prices in the international market and also to secure revival of the IMF programme.

Other economic indicators have also continued to worsen after Pakistan's trade deficit widened by 64.90% from $23.826 billion in July-April 2020-21 to $39.290 billion in July-April 2021-22 amid increase in the import bill.

The country’s imports during July-April (2021-22) totalled $65.537 billion, up from $44.731 billion during the corresponding period of last year — an increase of 46.51%, according to the Pakistan Bureau of Statistics.

Meanwhile, overall exports during July-April (2021- 22) totalled $26.247 billion against $20.905 billion during the corresponding period of last year, an increase of 25.55%.

Talking to Business Recorder, Saad Khan, Head of Research at IGI Securities, said that the rupee will remain under pressure as the dollar rate index has reached an all-time high, owing to high demand of dollars against other currencies.

“This is being reflected in the Pak rupee, and unlike other currencies the recovery chances for the rupee are low owing to the deteriorating domestic economic situation,” said Khan.

The analyst was of the view that the government needs to do away with the fuel subsidy at the earliest in order to get into the IMF programme. He also said stringent measures should be taken to curb the import of non-essential items such as autos and smartphones.

“There seems to be a lack of will to take these measures by the government as they will not be politically popular,” said Khan.

Inter-bank market rates for dollar on Monday

BID Rs 194.20

OFFER Rs 194.40

Open-market movement

In the open market, the PKR lost 1.60 rupees for buying and 1.80 rupees for selling against USD, closing at 195 and 196.50, respectively.

Against Euro, the PKR lost 50 paisas for both buying and selling, closing at 202.50 and 204.50, respectively.

Against UAE Dirham, the PKR lost 40 paisas for buying and 50 paisas for selling, closing at 53 and 53.50, respectively.

Against Saudi Riyal, the PKR lost 80 paisas for both buying and selling, closing at 52 and 52.50, respectively.

Open-market rates for dollar on Monday

BID Rs 195

OFFER Rs 196.50

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Safder Lodi May 17, 2022 05:26am
Aggrieved poor people are at the mercy of merciless rulaters
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