Rupee dips, but with a wary eye on economic data

• Rupee depreciates 0.24% to close at Rs167.66 in the inter-bank market on Thursday.
• Local currency trades 77 paisas away from an all-time low of Rs168.43 recorded on August 26, 2020.
• “Higher demand for dollars than supply is reflected in currency parity," says head of research of investment company.

KARACHI: The rupee dipped on Thursday, hitting its lowest point in three days, as traders looked forward to the current account and remittances data due next week.

The remittances and current account data will offer the latest indication of how much pressure the State Bank of Pakistan (SBP) is under to move, as will the central bank’s monetary policy decision due on September 27.

The local currency traded at Rs167.66 per dollar in the inter-bank market on Thursday, down 0.24% or 41 paisas — 77 paisas away from an all-time low of Rs168.43, recorded on August 26, 2020.

Speaking to Geo.tv, Pakistan-Kuwait Investment Company Head of Research Samiullah Tariq said: “The currency depreciation is due to pressure from the Afghanistan situation along with the current account deficit.”

The analyst highlighted that the SBP does not use its reserves to defend the currency and “the currency is flexible”.

Tariq added: “Higher demand for dollars than supply is reflected in currency parity.”

During the day, Finance Minister Shaukat Tarin told the Senate Standing Committee on Finance that trade with Afghanistan will be carried out in the Pakistani currency as Kabul is facing a shortage of dollars.

Going forward, the local currency is expected to consolidate taking positive cues from the development, however, the currency parity depends on economic data and clarity regarding the ongoing situation in Afghanistan.