KARACHI: The Pakistani rupee continued to extend its losses on Wednesday, falling by Rs1.17 against the dollar during interbank trade.
The PKR closed at Rs220.88 as compared to yesterday’s close of Rs219.71, according to the State Bank of Pakistan (SBP).
The dollar had managed to make a slight gain against the rupee on Oct 12, breaking its 13-day rally triggered after the announcement of Ishaq Dar’s appointment as finance minister.
The local currency appreciated by almost Rs22, or 10.1pc, against the greenback in those 13 sessions. However, since the reversal of the trend, the PKR has lost Rs1.92, or 0.88pc, in the last five sessions.
Head of Research at Tresmark, Komal Mansoor, attributed the rupee’s decline to a “continuous erosion” of the country’s foreign reserves, which fell to a three-year-low in the week ending Oct 7.
“Foreign exchange swaps are also in negative territory and depict thin dollar liquidity in the interbank market. Pakistan CDS (Credit Default Swaps) are also on the rise,” she added.
Mansoor said that while a decrease in the trade deficit and Dar’s comments on the rupee being undervalued made a case for the local currency’s support, there was still a strong appetite for dollars both in the interbank and open market which would keep the rupee under pressure.
Exchange Companies Association of Pakistan (Ecap) General Secretary Zafar Paracha also shared a similar view. There was a severe shortage of dollars in the open market, he said.
He said the grey market was offering much higher rates — Rs230-232 per dollar — while rates being offered in Peshawar and Afghanistan were as high as Rs235 and Rs245 per dollar, respectively. “Hence, people are not approaching exchange companies [for buying or selling in] a legal manner.”
He also cited a few other factors for the decline in the rupee’s value, including a reduction in remittances and reserves and a cut in the country’s sovereign credit rating by Moody’s Investor Service. – Agencies
