Rupee appreciates for third straight day against US dollar

• With a fresh increase of 0.36%, the currency closes the week at Rs171.65.
• Cumulatively, the currency gained around Rs2.35 during the ongoing week.
•  Foreign exchange reserves held by SBP fell by 2% on a weekly basis.

KARACHI: The rupee gained for the third straight day against the US dollar on Friday as the currency closed the week at Rs171.65, recording an increase of 0.36% during the day.

Cumulatively, the currency gained around Rs2.35 during the ongoing week owing to $3 billion deposits from Saudi Fund for Development.

On Tuesday, the currency had dropped to an all-time low of Rs175.25 against the US dollar.

According to the data released by the central bank on Thursday, the foreign exchange reserves held by SBP fell 2% on a weekly basis.

On October 22, the foreign currency reserves held by the SBP were recorded at $17,146.7 million, down $346 million compared with $17,492.2 million on October 15.

Meanwhile, overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $23,933.8 million. Net reserves held by banks amounted to $6,787.1 million.

World Bank report

The World Bank in its report titled: ‘The Pakistan Development Update’ – the flagship biannual report – released on Thursday shed light on the potential drivers of the recent depreciation of the Pakistani rupee.

It stated that the rupee reached a more than two-year high of Rs152.27 against the US dollar on May 7, 2021. However, the rupee has subsequently been depreciating, losing more than 10% of its value against the greenback in just under five months.

The international financial institution attributed the sharp decline in the rupee to a few significant global, regional and Pakistan-specific developments that have occurred in recent months which include widening trade deficit, MSCI downgrade, increasing the likelihood of global monetary policy tightening and the Afghan crisis.

The report revealed that the Pakistani rupee depreciated by 7.7% against the greenback in Q1FY22 — partly due to pressures from the rising import bill.