Rupee falls by 0.1pc against US dollar on weekly basis

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KARACHI: Pakistan rupee continued its losing streak against the US dollar in the interbank and shed Rs0.17 (-0.10 percent) during the last week, mainly due to high import bill and volatile situation in neighbouring Afghanistan. According to the State Bank of Pakistan, the US dollar opened at Rs168.02 on Monday last in the interbank and closed at Rs168.19 on Friday, the last working day of the week. Overall, Pakistani rupee shed Rs0.17 during this week against the US dollar, while depreciation during the fiscal year 2021-22 has been Rs10.75. The local unit has shed Rs7.92 against the US dollar in the current year 2021. The local currency has maintained a downtrend after it touched 22-month high of Rs152.27 in May 2021, losing a cumulative Rs15.88 in the past four months to date. During the last week, the rupee weakened by 8 paisas (-0.05 percent) against the US dollar on Monday and closed at Rs168.10. The local united continued its losing streak for the next two days on Tuesday and Wednesday and weakened by 84 paisas (-0.50 percent) and by 18 paisas (-0.50 percent), respectively. On Tuesday and Wednesday, Pakistani rupee set all-time low levels against the greenback of Rs168.94 and Rs169.12, respectively. However, the rupee turned around on Thursday and recovered 94 paisas (+0.58 percent) against the US dollar. This was the highest recovery against the greenback the Pakistani rupee in recent past. TLTP
The local unit remained almost flat against the US dollar on Friday and shed only one paisa (-0.01 percent) to close the week at Rs168.19. Within the open market, the rupee was traded at Rs168.30/169.50 per dollar in the last trading session of the week.
The rupee has been witnessing sharp decline due to dismal trade data during the last two months, situation in Afghanistan and higher import bill. The country faced a trade deficit of $4.229 billion in the second month of the fiscal year 2021-22, which surged by 144.17 percent on a year-on-year (YoY) basis in August 2021 as compared to a deficit of $1.732 billion recorded in August 2020. According to the data released by Pakistan Bureau of Statistics (PBS), the trade deficit on a month-on-month basis surged by 29.68 percent in August 2021 against a deficit of $3.261 billion recorded in July 2021.
The currency experts are divided over the fate of the rupee in the coming week. Some think that the rupee/dollar parity is likely to face further pressure on ballooning current account deficit next week. They said that the rise in the import payments may be attributed to acceleration in the economic activities, following the ease in coronavirus cases. The government has relaxed the restrictions and trade and commercial activities are going back to normal, they added.
Talking about the Afghanistan factor, they said the burden Pakistan would have to shoulder due to this development is to the tune of $500-700 million per month.
However, other experts expect that Pakistani rupee will stay steady against the greenback during this week. They said the local unit is expected to trade within the existing range this week amid matching the dollar demand and supply, while the central bank’s monetary stance will also factor in.