KARACHI: December proves to be a disappointing month for the rupee that set another all-time low of 178.04 – ninth during the month – against the US dollar on Friday.
According to the State Bank of Pakistan, the dollar opened at Rs177.98 in the interbank market and closed at Rs178.04. The rupee shed 0.03 percent during the day, continuing its slow and steady decline against the greenback.
Within the open market, the rupee was traded at 180/181 per dollar. The rupee’s depreciation during the ongoing fiscal year 2021-22 has been Rs20.62 and Rs17.89 in the current year 2021.
Earlier during the current month, the dollar hit the then highest ever levels of Rs177.98 on December 15, Rs177.89 on December 13, Rs177.71 on December 10, Rs177.61 on December 9, Rs177.43 on December 8, Rs176.79 on December 7, Rs176.77 on December 3, and Rs176.42 on December 02.
Pressure has mounted on the rupee in recent weeks, with everything now hinging on whether the government strikes a deal with the International Monetary Fund (IMF) over the release of new funds.
To land the deal, a mini-budget is due in the next few days, which will presumably pave the way for an IMF agreement and the release of funds. It is expected to give the rupee some respite.
Apart from economic challenges, the geopolitical situation with Afghanistan has also weighed on the currency; however, there is optimism the current adjustments will finally pave the way for a broader recovery for the economy and the currency.
The one big positive in recent days has been the deal struck with Saudi Arabia whereby the country deposited $3 billion with the SBP. The rupee had to deal with debt repayments by the government, dollar reduction in the market, as well as inflationary pressures. This is why there is the added pressure in recent days.
According to currency dealers, the demand for the dollars for import and corporate payments remained high during the day. They said the dollar’s demand remains usually high by the close of a calendar year.
They said foreign entities operating in Pakistan send their profits and dividends to their parent companies abroad by the end of the quarter. Further, higher international commodity prices kept the demand for the dollar.