Rupee weakens further, falls to new low of Rs177.61

• Rupee loses ground against US dollar in the interbank market amid higher import payments.
• Analysts say the local rupee-dollar parity is based on the demand and supply phenomenon.
• With a fresh decline of 0.10%, the rupee has depreciated by 12.75% since July 1, 2021.

KARACHI: Contrary to market expectations, the Pakistani rupee continued to lose ground against the US dollar in the interbank market amid higher import payments and worries about the outlook for the country’s external sector.

The rupee closed at 177.61 against the greenback, falling further from its previous record low of 177.43 on Wednesday. It depreciated by 18 paisas during the session.

Analysts told Geo.tv that the local rupee-dollar parity is based on the demand and supply phenomenon. “At present, the demand is higher from importers, however, it cannot be met due to lack of sufficient supplies,” a currency dealer mentioned.

Moreover, expectations regarding a hike in the benchmark policy rate by 75-100 basis points in the monetary policy meeting scheduled for December 14, coupled with the anticipation of further depreciation in the currency in the days ahead reduced the supplies.

Analysts predict the local currency will remain under pressure as it is hit by concerns about trade and current account deficits and external factors such as rising oil prices.

The rupee has maintained the downtrend for the past seven months. It has lost 16.64% (or Rs25.34) to date, compared to the 22-month high of Rs152.27 recorded on May 14.

With a fresh decline of 0.10%, the rupee has depreciated by 12.75% (or Rs20.1) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.

Earlier, Arif Habib Limited Head of Research Tahir Abbas had predicted that the current account deficit will clock in within a range of $2-2.5 billion.

However, he had mentioned had that 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.

Abbas had highlighted 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 had forecasted that the local currency "will trade in a range of Rs175-177 against the greenback till the end of the calendar year 2021".