KARACHI: The Pakistani rupee on Tuesday fell further against the United States (US) dollar in intra-day trading in the inter-bank currency market.
According to forex dealers, the local unit depreciated by Rs0.57 and is currently trading at Rs175 against the greenback, touching a new record low.
On Monday, the rupee closed at Rs174.43 against the US dollar, showing depreciation of 43 paisas or 0.25 percent over Friday’s close of Rs174.
The rupee’s slide against the US dollar continues despite a number of measures introduced by the State Bank to ease the pressure on the exchange rate.
Earlier, SBP Governor Reza Baqir created quite a stir on social media after he defended the rupee depreciation saying it benefited overseas Pakistanis and claimed that inflation in the country was artificial and would be controlled.
He said the rising exchange rate has led to price hike.
The Pakistani rupee’s depreciation during the fiscal year 2021-22 has been Rs17.01. The local unit has shed Rs14.16 against the US dollar in the current year 2021.
The local currency has maintained a downtrend after it touched a 22-month high of Rs152.48 in May 2021, losing a cumulative Rs22.12 in the past five months to date.
Currency experts attributed the high dollar demand to the opening of the market after two weekly holidays. They further said that the massive external payments of imports and debt repayment by the State Bank of Pakistan (SBP) have also put pressure on dollar demand.
The official foreign exchange reserves of the State Bank recorded a decline of $1.646 billion to $17.492 billion by the week ended October 15, 2021 as compared with $19.138 billion by the week ended October 08, 2021. The SBP attributed the decline in foreign exchange reserves to external debt repayment, which included repayment of $1 billion against Pakistan International Sukuk.
Furthermore, the current account deficit ballooned to $3.4 billion during July–September 2021 as compared with a surplus of $865 million in the corresponding period of the last fiscal year. This factor also put pressure on the local currency.
Though the central bank has taken a number of steps to ease the pressure on the exchange rate since August, the local currency continues to fall against the US dollar and these measures have miserably failed to produce any positive results.