KARACHI: There was no respite from the declining rupee as the Pakistani currency fell to an over 2.5 month low of Rs177.83 against the US dollar in the inter-bank market on Thursday as demand for the foreign currency stood higher compared to its supply in the wake of an increase in import payments.
According to the data released by the State Bank of Pakistan (SBP), the local currency closed at Rs177.62 against the greenback on Wednesday.
The decline was attributed to the provisional numbers of trade deficits that declined by 10% month-on-month during February 2022.
During the month of February, exports stood at $2.81 billion while imports clocked in at $5.90 billion. Cumulatively, the trade deficit increased by 82% to $31.96 billion during the eight months of the ongoing fiscal year 2021-22 (July-February).
After posting a fresh decline of 0.12%, the Pakistani rupee has depreciated by 12.87% (or Rs20.29) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.
The rupee had maintained a downward trend for the past ten months. It has lost 16.78% (or Rs25.56) to date, compared to the record high of Rs152.27 recorded in May 2021.
Investors are also closely monitoring developments regarding the International Monetary Fund (IMF) review.
Pakistan and the IMF are meeting this week to review the relief package Prime Minister Imran Khan announced to lower petrol, diesel and electricity prices in the face of a difficult international environment.
The IMF team will kick-start virtual parleys with Pakistani authorities on March 4, and these talks will continue for two weeks for the completion of the seventh review under the $6 billion Extended Fund Facility (EFF) program.
Traders are also closely watching the outcome of the plenary session of the Financial Action Task Force (FATF) starting from February 21 to March 4 in Paris for the clue regarding the rupee’s future course.
The FATF's upcoming decision would decide whether Pakistan should exit from the grey list.