Rupee slides further down to 177.71 against dollar

• Local currency surpasses Thursday’s record low of Rs177.61 due to increased demand from importers.
• According to a poll, majority of the financial market participants expect Pakistani rupee to stay within a range of 180-185 by the end of FY22.
• Rupee has depreciated by 12.80% since the start of July 1, 2021.

KARACHI: Pakistani currency downward slide continued on Friday as the local unit edged lower by 0.06% to settle at Rs177.71 against the US dollar in the interbank market.

The local currency surpassed Thursday’s record low of Rs177.61 due to increased demand from the importers and a lack of sufficient supplies.

According to a poll of key financial market participants conducted by Topline Securities, the majority of the participants (43%) expect the Pakistani rupee to stay within a range of 180-185 by the end of FY22, while 33% of participants expect it to be in the range of 175-180.

Earlier, analysts had 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 had mentioned.

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

Analysts had predicted 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 16.7% (or Rs25.44) to date, compared to the 22-month high of Rs152.27 recorded on May 14.

With a fresh decline of 0.06%, the rupee has depreciated by 12.80% (or Rs20.17) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.

Foreign exchange reserves rise by 16.6%

Meanwhile, the central bank’s foreign exchange reserves increased by 16.6% on a weekly basis, data released by the State Bank of Pakistan (SBP) showed on Thursday.

On December 3, the foreign currency reserves held by the central bank were recorded at $18,658.2 million, up by $2,648 million compared with $16,010.3 million on November 26.

“After accounting for external debt and other official payments, SBP reserves increased by $2.648 billion,” it had said, adding that the increase in reserves came primarily on the back of a $3 billion deposit by the Saudi Fund for Development.

Meanwhile, overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $25,150.7 million. Net reserves held by banks amounted to $6,492.5 million.