Rupee’s 10-session depreciation run finally came to a halt, as the local currency registered a marginal improvement against the US dollar in the inter-bank on Friday. The rupee, however, remained at the 239 level.
As per the State Bank of Pakistan (SBP), the rupee closed at 239.37, a day-on-day gain of Rs0.57 or 0.24%, against the greenback.
On Thursday, the rupee closed at 239.94, a day-on-day fall of Rs3.92 or 1.63%, amid pressure due to import payments and the government’s reported inability to intervene.
Rising political and economic stress has kept the rupee on the receiving end against the US dollar. Despite Friday’s gain, the local currency has depreciated over 13% in the last 11 trading sessions.
“Political tension again flared up after the change of political setup in Punjab, deepening uncertainty and affecting the overall economic scenario of the country,” said Trust Securities and Brokerage Limited in a note on Friday.
On Thursday, S&P Global Ratings (previously Standard and Poor’s) revised the outlook on Pakistan’s long-term ratings to negative from stable to reflect the country’s weakening external metrics against a backdrop of higher commodity prices, tighter global financial conditions, and a weakening rupee.
“This would consequently hurt equity and forex markets, impacting the rupee already facing a free-fall scenario, deteriorating market confidence,” added Trust Securities and Brokerage Limited.
Furthermore, State Bank of Pakistan’s reserves dropped by $754 million to $8.575 billion.
Meanwhile, economic experts have expressed concern over the currency free-fall, urging authorities to take measures to arrest the decline.
“Being an import-based country, the rise in dollar rate adds to our difficulties, whereas the country’s external debt also increases,” said Zafar Paracha, General Secretary of Exchange Companies Association of Pakistan (ECAP), in a video message.
“Furthermore, our expenses are more than our income. However, the government seems unwilling to cut down its expenses, adding pressure on the national exchequer,” he said.
Paracha informed that the USD is being sold at Rs250 level in the “black market”, while authorities have adopted a lax attitude in this regard.
The story was originally published in Business Recorder on July 29, 2022.