KARACHI
Pakistani rupee extended losses against the US dollar in the inter-bank market for the second straight session on Wednesday with a depreciation of Rs3.26.
The State Bank of Pakistan (SBP) said in a tweet that the rupee opened at 277.03 against the dollar in the interbank market and closed at 280.29, showing a depreciation of 1.16 percent.
The local currency surged more than 6 percent in the past month to become the top performer in the world.
The rupee has appreciated by Rs5.70 during the current fiscal year 2023-24, while it has depreciated by Rs50.87 in the current year.
Similarly, the Pakistani rupee plummeted by Rs6.50 against the greenback in the open market. The rupee was quoted in the range of 280-283 a dollar as compared to 273.50-276.50 in the previous session.
The rupee has recovered by Rs49 against the dollar in the last 31 sessions in the open market.
According to analysts, the rupee fell sharply against the dollar on Wednesday due to import pressure, as the country faces an uphill task on the economic front. Dr Khaqan Hassan Najeeb, a former adviser to the Ministry of Finance, told a local television channel that in a market-based exchange rate regime as the one in Pakistan, a currency moves in both directions against other currencies based on market forces of supply and demand.
Najeeb said that administrative action in curbing the illicit market, a drop in demand for dollars, exporters cashing in receipts, and a slight uptick in remittances had been instrumental in improved dollar flows and strengthening of the rupee. Considering, he said, due debt payments on foreign loans and bonds, the need for imports, and possible slower inflows in the interbank, the rupee weakened by Rs3.26.
It is pertinent to mention that the JP Morgan Real Effective Exchange Rate index for Pakistan rose to 1 year high at 103. In order to ensure a smooth ride forward, the economist suggested Pakistan secure funding from donors and financial institutions.
It is worth noting that the International Monetary Fund (IMF) has set stringent benchmarks, with one requirement being that the gap between rates in the interbank and open markets should not exceed 1.25 percent. PKR’s consecutive upward flight follows a series of measures undertaken by the State Bank of Pakistan (SBP) to stabilize the Pakistani currency. Last month, the SBP introduced a comprehensive set of structural reforms aimed at regulating Exchange Companies and curbing the dollar’s ascent.
Simultaneously, the caretaker government implemented administrative actions to combat currency smuggling and hoarding. As a result, authorities conducted countrywide raids, leading to the closure of numerous illegal currency exchanges and the confiscation of foreign currency worth millions.
