KARACHI
Pakistani rupee continued losing ground against the US dollar for the fourth week in a row on the back of political and economic uncertainty, depreciating by 1.76 percent in the interbank market, 3.92 percent in open market and 3.75 percent in the black market/ Hundi.
According to the figures shared by the State Bank of Pakistan, the rupee opened at 295.78 in the interbank market on Monday last and closed at 301 on Friday, going down by Rs5.22 (-1.76 percent) against the greenback. The rupee depreciated in all five sessions of the week and set four consecutive all-time new lows against the dollar during the last four sessions.
During the current fiscal year 2023-24, Pakistani rupee has shed Rs15.01 against the US dollar in the interbank market, while it plummeted by Rs73.57 against the greenback in the current year.
Similar was the case in the open market, as the local unit opened in the range of 303-306 against the dollar on Tuesday and closed the week at 315-318, going down by Rs12 (-3.92 percent). Following suit, the dollar was quoted at Rs320 in the black market/Hundi on Monday last and Rs332 was the rate at the end of the week, showing a depreciation of Rs12 (-3.75 percent).
According to currency experts, the local unit continues to face immense pressure amid political uncertainty surrounding the general elections, which is causing turbulence in local markets. The rupee witnessed the all-time lowest levels against the dollar in the last four sessions. The rupee hit all-time lows of 301 on Friday, 300.22 on Thursday, 299.64 on Wednesday and 299.01 per dollar on Tuesday last. Prior to these lows, the rupee fell to 298.93 per dollar on May 11, 2023 in the backdrop of a deepening political turmoil and widespread law and order disturbances after former prime minister Imran Khan’s arrest in a case. Interestingly, all these lows have been recorded when the former prime minister was/is in jail.
According to currency experts, the demand for the dollar remained high as imports are opening up gradually. They said the rupee’s recent decline can be attributed to the removal of restrictions on letters of credit (LCs), which has led to an increased demand for dollars and subsequently weakened the rupee. They also said that there is a shortage of greenbacks in the market.
They said the rupee’s depreciation was expected, as under the $3 billion standby arrangement signed with the International Monetary Fund (IMF) in late June, the previous coalition government agreed to maintain a single currency rate in both interbank and open markets, with a slight difference of up to 1.5 percent increase in the open market’s value. They said that the open market was witnessing an upward trend, adding that this also had an effect on the interbank market.
On the other hand, foreign exchange reserves held by the SBP decreased by $125 million on a weekly basis, clocking in at $7.93 billion as of August 18. Total liquid foreign reserves held by the country stood at $13.25 billion. Net foreign reserves held by commercial banks stood at $5.32 billion. The central bank cited debt repayments as the reason for the decrease in the foreign currency reserves.
