Pakistan's rupee ended at a historic low against the US dollar in the inter-bank market, closing at 169.6 on Monday to surpass the level it registered just earlier this month.
Earlier, the rupee had closed at 169.12 on September 15, 2021, the then-lowest level, before a minor recovery began.
As per the State Bank of Pakistan (SBP), the PKR closed at 169.60 against the USD, a decline of 52 paisas or 0.31% on Monday.
The development raises further concerns over the demand-side pressure that has already seen the currency lose over 10% since its recent high in May 2021. In the past four months, the rupee has been under pressure amid concerns over import payments and the rising current account deficit.
The drop has also triggered a series of measures by the SBP aimed at curbing the import bill and arresting the decline of the rupee.
Analysts believe the SBP measures will take some time to take effect.
“The SBP measures would take time up to three months,” Samiullah Tariq, Head of Research and Development at Pakistan Kuwait Investment Company, told Business Recorder.
Tariq also said the latest drop in the rupee's value is market-driven.
Rupee edges near all-time low against the dollar
In recent days, the central bank has introduced a number of measures including 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. The SBP has also introduced curbs on auto financing.
As per SBP data, the current account deficit for August 2021 clocked in at $1.5 billion, nearly 88% growth in a single month, with the import figure hitting $6.6 billion.
Tariq said the current account deficit for September will not be more than the previous month.
"Import growth during August created a massive imbalance, which was twice the size of export figures. Amid the ease of travel restrictions, there has been a considerable outflow of dollars as well."
Talking about controlling the current account, Tariq said that there is a need to accumulate more dollars through an increased export base and higher remittances. "The deficit will also come down if international commodity prices stabilise."
Inter-bank market rates for dollar on Monday
BID Rs 169.60
OFFER Rs 169.70
Open-market movement
In the open market, the currency lost 1.10 for buying and 60 paisas for selling against the USD over last week’s rates, closing at 171.30 and 171.60, respectively.
Against Euro, PKR lost one rupee for both buying and selling, closing at 199 and 200.50, respectively.
Against the UAE Dirham, PKR lost 45 paisas for buying and 40 paisas for selling, closing at 47.25 and 47.50, respectively.
Against Saudi Riyal, PKR lost 15 paisas for both buying and selling, closing at 45.40 and 45.60, respectively.
Open market rates for dollar on Monday
BID Rs 171.30
OFFER Rs 171.60