The rupee depreciation continued as it declined 15 paisa on Tuesday to make the new historic low of Rs182.34 in the interbank foreign exchange market.
The exchange rate recorded 15 paisa decline in the rupee value from the previous closing on Monday at Rs182.19. The dealers said that the local unit continued making fresh lows amid falling foreign exchange reserves, volatile global commodity prices and political uncertainty on national and international front. They said that a no-confidence motion against the prime minister by the opposition parties had resulted in negative sentiments in the market, adding that import of commodities related to the holy month of Ramazan also increased the dollar demand. Large external payments against foreign debts also had a negative impact on the rupee value. Pakistan’s foreign exchange reserves fell by $2.28 billion to $21.44 billion by March 18, 2022, compared with $23.72 billion as of February 4, 2022. The foreign exchange reserves of the country hit record high at $27.23 billion on August 27, 2021. The volatile global oil prices also played its parts in keeping the rupee under pressure as the local forex market is uncertain due to the geopolitical uncertainties. The oil prices have seen continuous fluctuation amid the Russia-Ukraine war which began on February 24, 2022.
The ballooning current account deficit also escalated the dollar value. Pakistan’s current account deficit ballooned to $12 billion during the first eight months (July – February) 2021/22, against a surplus of $994 million in the corresponding months of the last fiscal year. Although the current account deficit narrowed to $545 million in February 2022, compared with the deficit of $2.53 billion in January 2022, the scheduled external repayments are still a threat to the balance of payment. The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs24.80 or 15.74 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs182.34. At the open market, the buying and selling of the dollar was recorded at Rs181.9 and Rs183.25 at 5:30pm PST.