Daily Times

Pakistani rupee edged slightly lower against the US dollar on Friday and shed the minimum possible amount i.e. one paisa.

According to the State Bank of Pakistan, the dollar opened at Rs178.12 in the interbank market and closed at Rs178.13 (-0.01). Within the open market, the rupee was traded at 178.20/179 per dollar. Overall, the rupee has shed Rs2.41 against the US dollar during the current month and nine paisas during this week. The rupee has depreciated by Rs20.71 during the ongoing fiscal year 2021-22 and Rs17.98 in the current year 2021.

Many independent economists argue that this recent depreciation of the local unit was dictated by the International Monetary Fund (IMF) through prior actions and it has nothing to do with macroeconomic fundamentals. They say that there is a complete breakdown of economic policymaking as the country’s fiscal policy has become subservient to monetary and exchange rate policies.

They argue that the monetary tightening and exchange rate depreciation resulted in higher inflation, public debt and debt servicing. The empirical evidence shows that the one percent monetary tightening hikes the inflationary pressure by 1.3 percent in the case of Pakistan. An analysis of regional currencies versus the US dollar shows that the Pakistani currency experienced massive depreciation compared to others.

Earlier this week, the State Bank of Pakistan took more measures to enhance documentation and transparency in foreign exchange transactions through exchange companies. In order to enhance documentation and transparency and to further strengthen the foreign exchange regulatory regime, the SBP has amended the regulations governing sale of foreign exchange to individuals by exchange companies.

Earlier during this month, the rupee set 11 lowest ever levels against the US dollar. The dollar hit then highest ever levels of Rs178.15 on December 22, Rs178.05 on December 21, Rs178.04 on December 17, 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.