The exchange rate of Pakistan rupee depreciated by 85 paisas on Tuesday against the US dollar in interbank trading and closed at Rs168.94 as compared to the previous day’s closing of Rs168.09.
According to Forex Association of Pakistan, the buying and selling rates of dollar in the open market were recorded at Rs168.8 and Rs169.8 respectively.
The price of euro was appreciated by Rs1.57 and closed at Rs199.74 against the last day’s trading of Rs198.17, the State Bank of Pakistan reported.
The Japanese Yen gained one paisa to close at Rs1.53, whereas an increase of Rs 2.21 was witnessed in the exchange rate of British Pound, which was traded at Rs234.39 as compared to its last closing of Rs232.18.
The exchange rates of Emirates Dirham and Saudi Riyal increased by 23 paisas each to close at Rs45.99 and Rs45.04 respectively.
The highest value of the dollar against the rupee was last recorded at Rs168.43 on August 26 last year.
The dollar had hit a 13-month high on September 10, 2021, when it reached close to the record high and was traded at Rs168.02.
Since May this year, the dollar has been rapidly marching towards its peak value attained in August 2020 after foreign investments, including hot money invested in domestic bonds, started flying back to their destinations amid the pandemic impact, which began from the middle of March 2020.
However, the current situation is different from the previous episodes of increase in the dollar’s value because the foreign exchange reserves of the country are at their peak. The rising import bill played a key role. However, the fear of higher current account deficit in FY22 is also a strong force convincing the buyers to book more dollars for future imports.
The widening trade gap is creating fear among importers that the exchange rate would further support the greenback against the local currency.
For its part, the SBP remains silent over the recent steep fall of the local currency.
SBP Governor Dr Reza Baqir, during the presentation of monetary policy last month, made it clear that the current account deficit would be higher than FY21.
He had said the deficit would be in the range of two to three per cent and the exchange rate would respond to this deficit in the form of appreciation of the dollar. He had also not identified the limit of devaluation of local currency or the point of stability of exchange rate.
with additional input of APP