Pakistan's rupee weakened further against the US dollar, hitting a new low of 170.8 at the inter-bank on Monday.
As per the State Bank of Pakistan (SBP), the rupee closed at 170.8 against the USD, a depreciation of 32 paisas or 0.19%. The decline comes after the PKR failed to sustain the slight gain it recorded on Friday to finish at 170.48.
The PKR, which has seen its value depreciate by nearly 11% against the USD since its recent high in May, has come under immense pressure as a widening current account deficit, record growth in imports, as well as the Afghanistan situation take toll on the currency.
Pakistan's rupee breaks losing streak against US dollar
While the SBP has undertaken a number of measures to curtail imports, the effect has yet to take place. Last week, the SBP decided to impose a 100% cash margin requirement on import of 114 items, taking the total number to 525.
The SBP said that the measure will help discourage imports of these items and thus, support the balance of payments.
Earlier, the SBP revised its Prudential Regulations (PRs) for consumer financing to moderate import and demand growth. As per revised regulations, the maximum tenure of the auto finance facility was reduced from seven to five years.
“(However), the given measures are not much,” Malik Bostan, Chairman Forex Association of Pakistan, told Business Recorder.
Bostan was of the view that the issue is all about supply and demand, adding that an outflow of $300 million is taking place on a daily basis through imports. “There is a daily inflow of $200 million in exports and remittances, leading to a deficit of $100 million,” he said.
Bostan said that the government should temporarily ban a number of products in order to curtail imports. "The foreign exchange reserves need to be around $40 billion for stability."
As per the central bank, total foreign reserves held by the country are currently around $26.15 billion.
“The PKR is likely to remain choppy in the near term until the official announcement of its meeting with the IMF,” Asad Rizvi, Former Treasury Head Chase Manhattan, tweeted on Monday.
The former banker also said that the Pandora Papers could also potentially lead towards uncertainty.
Inter-bank market rates for dollar on Monday
BID Rs 170.70
OFFER Rs 170.80
Open-market movement
In the open market, the PKR remained unchanged for buying while gaining 30 paisas for selling against USD, closing at 172 and 172.30, respectively.
Against Euro, the PKR gained 50 paisas for buying and 20 paisas for selling, closing at 198.50 and 200.30, respectively.
Against UAE Dirham, the PKR remained unchanged for buying while gaining 10 paisas for selling, closing at 47.90 and 48.10, respectively.
Against Saudi Riyal, the PKR gained 20 paisas for both buying and selling, closing at 45.50 and 45.70, respectively.
Open-market rates for dollar on Monday
BID Rs 172
OFFER Rs 172.30