Tuesday Dec 07, 2021
KARACHI: The Pakistan rupee on Tuesday continued its downward slide against the US dollar as it dropped to an all-time low of Rs176.79 in the interbank market at the close of the trading session.
The plunge came on the back of a mammoth import bill for November and widening current account deficit.
According to the State Bank of Pakistan (SBP), the rupee had closed at Rs176.48 on Monday.
Speaking to Geo.tv, Arif Habib Limited Head of Research Tahir Abbas said that the currency is depreciating on the back of a historic high import bill and the anticipation that the current account deficit will clock in within a range of $2-2.5 billion.
It is pertinent to mention here that despite receipt of Saudi funds worth $3 billion the currency is depreciating because of $7.7 billion imports in November.
"Going forward, the local currency is expected to recover in the months to come after the release of funds from the International Monetary Fund (IMF) and World Bank in January," he said.
Abbas was of the view that the impact of reducing oil prices in the international markets and the measures taken by the government to reduce the imports will be prominent in a month or two.
Therefore, he predicted that the local currency "will trade in a range of Rs175-177 against the greenback till the end of the calendar year 2021."
The rupee has maintained the downtrend for the past six months. It has lost 16.1% (or Rs24.52) to date, compared to the 22-month high of Rs152.27 recorded on May 14.
With a fresh decline of 0.18%, the rupee has depreciated by 12.21% (or Rs19.25) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.
Moreover, the Pakistani rupee's value against the US dollar has fallen by 30.5% during the incumbent PTI-led government's tenure, as per a report in The News.
The rupee witnessed massive depreciation from Rs123 against the US dollar in August 2018 to Rs177 against the US dollar in December 2021, over the last 40 months. This makes it one of the highest devaluations of the currency in the country’s history.
The only other higher devaluation occurred when Dhaka fell and Pakistan’s currency was devalued by 58% from Rs4.60 to Rs11.10 against the US dollar in 1971-72.
Many independent economists argue that this recent devaluation of the currency was dictated by the IMF through prior actions and it has nothing to do with macroeconomic fundamentals.