Pakistani rupee snapped a three-day winning streak against the US dollar and fell to 185.87 on Thursday. The State Bank of Pakistan said in a statement that the rupee opened at 185.45 against the US dollar in the interbank market and closed at 185.87 after losing 42 paisas (-0.23 percent). Within the open market, the rupee was traded at 185.40/186.90 per dollar against 185/186.5 a dollar a day earlier.
Overall, the rupee has gained Rs0.88 against the dollar during the last four days after shedding Rs5.20 last week. The rupee has depreciated by Rs28.44 against the US dollar during the ongoing fiscal year 2021-22 and Rs9.42 during the current year 2022.
The rupee reversed gains against the dollar today after the International Monetary Fund (IMF) downgraded its growth rate forecast for Pakistan. According to the lender’s latest report “Regional Economic Outlook Middle East and Central Asia, divergent recoveries in turbulent times”, Pakistan’s GDP growth is projected to moderate from 5.6 percent in 2021 to 4 percent in 2022, and 4.2 percent in 2023.
Moreover, the IMF has projected consumer price inflation at 11.2 percent for 2022, up from 8.9 percent in 2021. Core consumer price inflation is projected at 8.5 percent for 2022 and 10 percent for 2023 against 6.6 percent in 2021. In a few, domestic supply-chain constraints (Armenia, Kyrgyz Republic) and stronger domestic demand (some CCA countries, Pakistan) have added to inflation pressures, the Fund added.
Discussing the local currency’s performance earlier during the day, the former treasury head of Chase Manhattan Bank, Asad Rizvi tweeted that the undervalued PKR has continued to gain strength by inching up versus the USD. The rising rupee has nothing to do with optimism about the economy; it is rather due to reduced political uncertainty. The imports are still costlier and the economy is solely dependent on foreign borrowing, he lamented.