Daily Times

Pakistani rupee appreciated by one paisa (+0.01 percent) against the US dollar on Wednesday. The State Bank of Pakistan said that the dollar opened at Rs176.75 in the interbank market and closed at Rs176.74. The rupee witnessed lacklustre trading during the session, showing the intraday high bid of 176.75 and low offer of 176.65. Within the open market, the rupee was traded at 177.50/178.50 per dollar.

The currency experts are of the view that the US dollar may face a further depreciation in the coming days, saying the greenback is overvalued while the local currency is undervalued. They said that commodity prices in the international market are likely to decline in the coming months, which will cut Pakistan’s import bill and ease off the pressure on the rupee.

They said that rising cases of Covid-19 across the world may compel governments to impose lockdown, giving some room to Pakistan to increase its exports and decrease imports. This may benefit the rupee if macroeconomic stability in the country remains intact.

Finance Minister Shaukat Tarin last week said the US dollar was overvalued due to the prevailing situation in Afghanistan and its exchange rate should be between Rs165 and Rs170. He hoped that the artificial rise in the American currency’s value would be controlled.

Overall Pakistan rupee has shed 23 paisas against the US dollar during this week and calendar year 2022. Despite State Bank of Pakistan’s intervention and the general bias for a strong rupee, the local unit has depreciated by Rs19.31 during the ongoing fiscal year 2021-22. The local currency weakened by 10.44 percent (Rs16.68) against the dollar during the calendar year 2021.

The experts warned that trade and current account deficits due to rising import bill are major threats to the rupee’s stability. Further, the decline in the foreign exchange reserves also threatens the rupee stability. The foreign exchange reserves held by the country decreased to $24.27 billion from $24.63 billion in a week, the SBP said on Thursday. The reserves held by the central bank during the week decreased by $298 million to $17.855 billion. Likewise, the reserves of commercial banks dropped to $6.41 billion from $6.48 billion.