The Pakistani Rupee (PKR) continues to crumble against the US Dollar (USD) in the interbank currency market. Today, PKR deteriorated massively by Rs. 1.24, hitting a nine- and a half month low.
PKR closed at Rs. 163.67 to the USD on Monday (August 2) as compared to Rs. 162.43 to the USD on Friday (July 30). This is the lowest value for the rupee against the greenback since October 13, 2020.
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According to experts, multiple factors have caused Rupee’s downfall, not just against the USD but also against other major currencies.
Asad Rizvi, the former Treasury Head at the Chase Manhattan Bank, regarding this continued deterioration, said that the current account has started to show a deficit after 11 months of surplus. “This means that the government will have to continue to borrow to finance its expenditures and that will obviously weaken the currency.”
He added, “The demand-supply factor is also relevant here,” with importers needing US Dollars that is also adding pressure.
A.A.H Soomro, Managing Director at Khadim Ali Shah Bukhari Securities, told ProPakistani that PKR is flexible and reflecting market conditions. He said, “So far the PKR hasn’t dropped to new lows of Rs. 168 [to the USD]. This will not be majorly impacting inflation as government is subsiding Petrol by Rs. 30/liter which is more of an inflationary event.”
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Soomro said, “PKR at Rs. 165 onwards is a disorderly movement and should stabilize as the depreciation will be too sharp. We will have dollars flow in from IMF as well so my next range is Rs. 164-166 [to the USD] for a couple of quarters.”
He added that the current account deficit (CAD) needs to be lower than $900 million a month on average. “We can live with PKR at Rs. 168 [to the USD] by June 22,” he noted.
Asad Rizvi’s opinion concurs with Soomro’s in that Rizvi said, “When oil prices fall, which I expect would ease in the next fortnight to one month, which will help the Rupee. But a lot of factors are involved in stabilizing the Rupee.”
He said, “Hopefully, remittances would increase, which will help stabilize PKR. Besides the SBP is adopting stricter policies as a result of anti-money laundering conditions, so, hopefully, PKR would remain stable. But future predictions depend on all these factors and even more, including global oil prices.”
Other market experts are of the opinion that as the US Dollar is gaining strength against world currencies on its own as well, so that is another reason for the drop in the rupee’s value against the USD.
PKR witnessed a day of losses against all other major currencies as well.
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It deteriorated significantly by Rs. 1.27 against the Euro, by 88.2 paisas against the Pound Sterling (GBP), by 14.9 paisas against the Australian Dollar (AUD), and by 57.5 paisas against the Canadian Dollar (CAD).
PKR also deteriorated by over 33 paisas against both the UAE Dirham (UAE) and the Saudi Riyal (SAR) in the interbank currency market today. PKR witnessed a day of losses against all other major currencies as well.
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