The Rupee was back to winning ways against the US dollar in the inter-bank market on Wednesday, a day after inching down to snap a 13-day winning streak against the greenback, and improved by 17 paisas (+0.06 percent).
The State Bank of Pakistan (SBP) said in a tweet that the rupee opened at 281.89 against the dollar in the interbank market and closed at 281.72. Overall, the local unit improved by 67 paisas against the greenback last week while it gained Rs5.17 during the previous seven weeks closed on positive notes.
Similarly, the rupee improved by Rs6.57 during the current fiscal year 2023-24 and 20 paisas in the current year. The rupee gained Rs3.31 against the US dollar in December, while it shed Rs3.69 against the US dollar in November after gaining Rs6.26 (+2.23 percent) against the greenback in the month of October. The currency surged more than 6 percent in September to become the top performer in the world.
On the other hand, the local unit remained unchanged against the greenback in the open market. The rupee was quoted at 280.50 for buying and 283.50 for selling as compared to the same rates in the previous session, according to data provided by different exchange companies. The rupee gained Rs3.50 against the greenback in December while it surged by 50 paisas against the greenback last week.
Internationally, the US dollar rose broadly on Wednesday and stood near a two-week high against its major peers, underpinned by a confluence of factors including elevated US Treasury yields and a cautious turn in risk sentiment that weighed on Wall Street. The US currency was broadly firm, enjoying some respite after having fallen 2 percent last month and clocking its first yearly loss since 2020.
Meanwhile, Pakistan’s foreign exchange reserves held by the SBP witnessed a significant increase of $852 million on a weekly basis, clocking in at $7.75 billion as of December 22, data released on Thursday showed. Total liquid foreign reserves held by the country stood at $12.85 billion. Net foreign reserves held by commercial banks stood at $5.1 billion. The SBP attributed the surge in the reserves to official government inflows.
The Pakistani rupee concluded 2023 as one of Asia’s worst-performing currencies, plummeting by Rs55.43 (-19.67 percent) against the US dollar. This is far worse than the 5-year average depreciation of 12.92 percent and 10-year average depreciation of 8.95 percent. In the previous calendar year, the home unit had depreciated by Rs49.9 (-22.05 percent) against the USD. The key factors that exerted pressure on the local currency throughout the year were the high debt payments, depletion of foreign exchange reserves, increased profit repatriation, political instability, and soaring inflation. High debt obligations continued to create an external funding gap.