Rupee crosses 178 barrier against US dollar

• Currency fall dashes market hopes for recovery due to expectation of higher-than-anticipated current account deficit.
• Cumulatively, during the week that ended on December 17, the local currency lost around Rs0.33.
• Analysts believe the anticipated current account number is unsustainable which is taking a toll on the local currency.

KARACHI: Defying market expectations of currency stability, the rupee continued to lose ground against foreign currencies as it hit a new all-time low of Rs178.04 against the US dollar in the inter-bank market on Friday.

The rupee had closed at Rs177.98 on Thursday, showing a day-on-day drop of 0.03% on Friday, according to the State Bank of Pakistan (SBP).

Cumulatively, during the week that ended December 17, the local currency lost around Rs0.33.

Pakistan’s current account deficit is expected to widen by $2 billion to $2.5 billion in November in the wake of a surprising spike in the import bill to a record high at $8 billion.

Analysts believe that the anticipated current account number is unsustainable which is taking a toll on the local currency.

Adviser to Prime Minister on Finance and Revenue Shaukat Tarin said had time and again stated the exchange rate would move two ways but it was not happening, so the one-way downslide of depreciation of rupee against dollar continued unabated.

The rupee has maintained the downtrend for the past seven months. It has lost 16.92% (or Rs25.77) to date, compared to the 22-month high of Rs152.27 recorded on May 14.

Meanwhile, the rupee has depreciated by 13.01% (or Rs20.5) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.

There are several reasons for dollarisation; the exporters stopped their proceeds abroad while importers rushed to open up their letter of credit, so the demand-supply gap further increased pressures on the exchange rate.

However, analysts believe that the mini-budget is expected to be unveiled next month and the measures, included in it, would support the stabilisation of the rupee.