Pakistani rupee (PKR) continued its slide on Monday as the currency dropped to a record low at Rs176.2 against the greenback in the inter-bank market owing to the growing current account deficit and swelling imports.
As per the State Bank of Pakistan (SBP), the rupee had closed at Rs175.46 on Friday.
Arif Habib Limited stated in its report that the rupee plummeted 0.42% day-on-day while it had been down 13.58% since reaching a high of Rs152.28 on May 14, 2021.
According to the report, the domestic unit has devalued by 10.59% since the start of its current fiscal year on July 1.
Head of Research at Pak-Kuwait Investment Company Samiullah Tariq said that the main reason behind the currency’s depreciation was the swelling current account deficit.
He noted, “Revenues of the country are less than its expenditures and this is building pressure on the currency and impacting the rupee-dollar parity”.
Head of Research Ismail Iqbal Securities Fahad Rauf said that the recent drop in the local currency’s value stemmed from the volatility in the foreign exchange market, which had continued during the last few sessions.
Rauf highlighted that the International Monetary Fund (IMF) had moved its board meeting from December to January, to discuss the approval of the fresh loan tranche for Pakistan.
He forecasted, “Therefore, volatility will persist in the currency market at least until the end of 2021”.
Rauf noted, “Although the State Bank of Pakistan has signed a deposit agreement with the Saudi Development Fund, the market is taking a cue from developments on the IMF loan tranche, hence $3 billion deposit by Riyadh may not help the rupee much.”
On the other hand, the Head of Research at Arif Habib Limited Tahir Abbas expressed hope that the deal with Saudi Arabia would reverse the rupee’s dive on Tuesday and trigger a recovery.