Thursday Oct 14, 2021
KARACHI: The Pakistani rupee weakened by another seven paisas against the US dollar in the inter-bank market on Wednesday, ending at Rs171.20 compared to the previous day’s closing of Rs171.13.
The local currency maintained its downtrend on the back of a hike in global commodity prices that increased the demand for the US dollar.
Moreover, looming uncertainty regarding the ongoing talks between the International Monetary Fund (IMF) and Pakistan added fuel to the downtrend.
With a fresh drop of 0.04%, the rupee has depreciated 8.67% (or Rs13.66) since the start of the current fiscal year on July 1, 2021, revealed data released by the State Bank of Pakistan (SBP).
According to data of the central bank, it has cumulatively dropped 12.43% (or Rs18.93) since its recent high of Rs152.27 against the greenback recorded on May 14, 2021.
However, the downtrend is expected to end soon as analysts suggest that the successful conclusion of the discussion between the IMF and Pakistan to resume a $6 billion loan programme will stabilise the rupee value at around current levels.
“The rupee volatility will end if policy talks between Pakistan and the IMF conclude successfully during the three days from October 13 to 15,” Pakistan-Kuwait Investment Company Head of Research, Samiullah Tariq, had told Geo.tv.
Earlier, analysts predicted that the local currency will trade in a range of Rs170-171 during the week.
It is pertinent to mention here that the central bank has opted for a flexible exchange rate to let market forces decide the per dollar value of the rupee keeping in view the demand and supply of the foreign currency.
However, in case the two sides fail to find a middle ground and talks end on an unsuccessful note, the rupee may cross several limits on the downside.
The analysts had also mentioned that the steps taken by the government and the central bank to reduce pressure on the rupee would start bearing fruit from November or December.