Pakistan rupee snapped its weeks-long losing streak against the US dollar during the last week and gained Rs2.35 (+1.35 percent).
According to the State Bank of Pakistan, the US dollar opened at Rs174 in the interbank market on Monday and closed at Rs171.65 on Friday, the last working day of the week. Within the open market, the rupee was traded at Rs172/175 per dollar during the week.
During the last week, the rupee struggled during the first two sessions and set two all-time lows on Monday and Tuesday; however, Saudi Arabia announced support of $3 billion to Pakistan for building its foreign exchange reserves. This support is in addition to a $1.2 billion deferred oil facility to Pakistan to help its balance of payment issues. This was the turning point that supported the depreciating rupee and during the next three sessions, the Pakistani rupee recovered Rs3.62 (+2.07 percent) against the greenback.
During the last week, the rupee started with setting a new low against the US dollar of 174.43 by shedding 43 paisas (-0.25 percent) on Monday, and further plummeted to 175.27 by shedding 84 paisas (-0.48 percent) on Tuesday. This was the all time lowest level of rupee against the US dollar.
Late on Tuesday, Riyadh announced that it would deposit $3 billion in the State Bank of Pakistan (SBP) and provide an oil credit facility of $1.2 billion to aid Pakistan’s economy and ease the pressure on foreign exchange reserves. This announcement changed the things altogether in the next three sessions with the rupee gaining Rs2.49 (+1.44 percent) on Wednesday — the highest day-on-day rupee’s recovery since April 2020, — 52 paisas (+0.30 percent) on Thursday and 61 paisas (+0.36 percent) on Friday.
The rupee depreciation during the fiscal year 2021-22 has been Rs14.23. The local unit has shed Rs11.38 against the US dollar in the current year 2021. The local currency has maintained a downtrend after it touched 22-month high of Rs152.48 in May 2021, losing a cumulative Rs19.36 in the past five months to date.
Currency experts said that Pakistan needs more inflows to stabilise the local currency. They said that the exchange rates are facing immense external payment pressure. They were of the view that the local unit may gain appreciation in the coming days as there is strong likelihood of resumption of $6 billion Extended Fund Facility (EFF) by the International Monetary Fund (IMF).
They said that the positive trend in rupee against the dollar after the announcement of Saudi support confirms that there was speculation in local currency, adding speculation in currency and dollar hoarding are against national interest.