Daily Times

Pakistan rupee continued its losing streak against the US dollar in the interbank and shed Rs1.44 (-0.88 percent) during the ongoing week, mainly due to volatile situation in neighbouring Afghanistan and high import bill.

According to the State Bank of Pakistan, the US dollar opened at Rs164.18 on Monday last and closed at Rs165.62 on Friday, the last working day of the week.

Overall, rupee’s depreciation during the fiscal year 2021-22 has been Rs8.26. The local unit has shed Rs5.43 against the US dollar in the current year 2021.

During the week, the rupee weakened by 25 paisa against the US dollar in the interbank on Monday despite the country receiving $2.77 billion from the International Monetary Fund (IMF) on the same day. The depreciation of the local unit continued on Tuesday and it was weakened by 77 paisas. Again on Wednesday, the rupee faced a blow of Rs1.08 (-0.65 percent) against the US dollar and it reached the lowest level against the greenback since September 21, 2020.

However, the next two days proved good for the local currency and it recovered Rs0.47 and Rs0.19 on Thursday and Friday, respectively.

According to currency dealers, the rupee has been witnessing sharp decline in the interbank owing to the situation in Afghanistan and higher import bill. They said that huge payments against machinery imports were made, which escalated the demand for the dollars. They said that the IMF allocation of $2.75 billion is conditional money to support the coronavirus crisis and it cannot be used for the fiscal space.

They said that delay in payments from Afghanistan against Pakistan’s export has created pressure on the rupee. They pointed out that Afghan traders are opening import LCs from Pakistan as they cannot open from their own country due to ongoing turbulence which has also weighed on the rupee. They feared that demand for the dollar for machinery import is likely to persist in the coming days, which may put pressure on the local currency. They said the rise in the international oil prices is also one of the factors that deteriorated the local currency.