Rupee slumps to new historic low of 170.66

• With the latest drop of Rs0.18, the local currency has depreciated by 2.57% or Rs4.28 in September 2021.
• Experts predict the currency will stabilise or consolidate in October after a successful review of the IMF programme.
• Analysts believe the only way to arrest the decline in the rupee’s value is to reduce imports and increase exports.

KARACHI: Pakistani currency plunged to a fresh low of Rs170.66 against the US dollar in the inter-bank market on Thursday amid a strong demand as growing imports exerted pressure on the already fragile rupee.

According to the State Bank of Pakistan (SBP), the local currency closed at Rs170.66 against the greenback today while the rupee traded at Rs170.43 a day earlier (Wednesday).

Financial experts believe that in order to arrest the decline in the rupee’s value imports should be reduced and exports should be increased. While quick and strict measures are also required to change the market sentiments that are weakening the currency.

With a fresh drop of Rs0.18 (or 0.11%), the rupee has lost 2.57% (or Rs4.28) during the month of September.

The local currency has maintained a downtrend since the last few months as it has depreciated 8.32% or Rs13.12 since June 2021 and 12.07% (or Rs18.39) since its recent high of Rs152.27 recorded on May 14.

A day earlier, speaking to Geo News, financial expert Farhan Bukhari had said the major reason behind constant currency devaluation is the “rapidly increasing trade deficit”. The widening deficit has increased the demand for the dollar.

Bukhari had said that the ongoing situation in Afghanistan also negatively impacted the Pakistani currency.”

Endorsing his views, Alpha Beta Core CEO Khurram Shehzad had said: “We need to harmonise the monetary and fiscal policy, if both these policies will move in separate directions, the economy will suffer badly,”

Forex Association of Pakistan President Malik Bostan told Geo News that the currency is majorly depreciating because of the situation in Afghanistan.

“Pakistan’s import bill is also increasing because of the uncertain situation in the neighbouring county. Since the accounts of Afghans have been frozen, the traders there are importing essential commodities from Pakistan and hence Pakistani importers have also increased their import orders to fulfil the local as well the demand of Afghanistan,” he had explained.

Bostan reiterated that Pakistan needs to increase its exports or else the “widening import bill will devastate the economy of Pakistan.”

Experts predict the currency will stabilise or consolidate in October after a successful review of the IMF programme.