The Pakistani rupee (PKR) continued its downward slide for the second consecutive day against the US dollar (USD) as the local unit closed the week at PKR 176.77 per USD, dropping by 35 paisa.
The rupee has lost 1.3 rupees against the USD during the outgoing week, in comparison to the previous week’s closing at PKR 175.46 per USD.
The depleting foreign exchange reserves and swelling current account deficit due to the record high import bill have driven PKR into a depreciation phase once again.
Foreign exchange reserves held by the country dropped by 1.21% or $275 million as it stands at $22.50 billion during the week ended on November 26, 2021.
The depleting forex reserves would barely cover the rising merchandise import bill for about three months if it continues the same path in the next few months. It must be noted that the country witnessed an all-time high import of $7.847bn during November 2021.
Furthermore, the delay of funds under Saudi Fund for Development (SFD) has also contributed to mounting pressure on the local currency. According to this deposit agreement, SFD shall place a deposit of $3 billion with the central bank. The deposit amount under the agreement shall become part of SBP’s Foreign Exchange Reserves.
Pakistan’s finance ministry spokesman said on Tuesday, “Saudi Arabia will deposit $3 billion in Pakistan’s foreign reserves in a week or so for one year at 4% interest under a support package signed on Monday”.
The rupee traded in a range of 25 paisa per USD showing an intraday high bid of 177.20 and an intraday low offer of 176.95.
According to the Exchange Companies Association of Pakistan, the Pakistani rupee lost 1.5 rupee for buying and selling during the day and closed at 179 and 179.50 respectively in the open market.
The local unit has devalued by 10.88% or PKR 19.22 during the fiscal year-to-date against the USD. The rupee has also weakened by 9.58% or PKR 16.93 in CY21, with the month-to-date (MTD) position showing a drop of 0.59%.
Meanwhile, the currency dropped by 25 paisa against the Pound Sterling as the day’s closing quote stood at PKR 234.6 per GBP, as the previous session closed at PKR 234.35 per GBP.
Similarly, the value of PKR weakened by 1 paisa against EUR which closed at PKR 199.59 at the interbank on Friday.
Within the money market, the State Bank of Pakistan (SBP) conducted an Open Market Operation in which it injected Rs.1.43 trillion for 7 days at 8.95 percent.
The overnight repo rate towards the close of the session was 9.00/9.20 percent, whereas the 1-week rate was 8.75/8.85 percent.