Rupee drops to lowest level since August 2020

• Local currency depreciates around 0.21% against the greenback on Friday.
• Since June, the rupee has cumulatively lost 6.2%. 
• On average, local currency to depreciate around 4-5% during the year, says Tahir Abbas.

KARACHI: The Pakistani rupee depreciated to Rs168.02 — the lowest level since August 2020 — against the US dollar owing to an increase in demand for the foreign currency in the inter-bank market on Friday.

The currency lost 36 paisas or 0.21% to hit its lowest level of Rs168.02 against the greenback. Since June, the rupee has lost 6.2% cumulatively.

The rupee hit a 22-month high of Rs152.27 in May 2021 but since then it has been on a downturn and has depreciated by 9.4%.

The weakening local currency may trigger a new round of price hikes and cause inflation in the economy.

Speaking to Geo.tv Arif Habib Limited (AHL) Head of Research Tahir Abbas said: “On a broader level, the currency has been depreciating because of widening trade deficit.”

Meanwhile, the analyst added that the ongoing situation in Afghanistan has also contributed to the downtrend.

“All eyes are on the International Monetary Fund (IMF) review — due later this month. If the IMF resumes the $6 billion programme, pressure on the local currency will ease,” Abbas added.

On average, the analyst expects the currency to depreciate around 4-5% during the year.

Earlier in March, the rupee emerged as the world’s best-performing currency, when it appreciated the most (4.09% to Rs153.55) against the US dollar from the opening level of January 1, 2021. However, recently it became the worst performer in Asia...(in) a basket of 13 currencies compiled by Bloomberg.