KARACHI: The rupee’s swift decline resumed on Tuesday, with the dollar hitting a fresh high of Rs178.19 after the close of the interbank foreign currency market, according to traders.
The currency rate fell two paisas versus the dollar in the interbank market from the previous day’s close of Rs178.17. The rupee’s previous record low was set on the previous day’s close.
Due to year-end foreign exchange requirements for import and corporate payments, dealers reported dollar demand remained strong. The foreign companies operating in Pakistan usually send their profits and dividends to their parent companies abroad by the end of every quarter.
Last week, the State Bank of Pakistan (SBP) imposed curbs on foreign exchange buying by individuals from the open market. The measure apparently failed to support the local currency due to mounting demand for import and corporate payments.
The SBP on December 19, 2021 imposed restrictions on the foreign exchange buying by individuals from the open market to discourage speculative gains. As per the restrictions, an individual can buy a maximum of $10,000/day and $100,000 in a year.
The dealers said that the widening of trade and current account deficits are also major threats to the rupee stability.
Pakistan’s current account deficit has ballooned to $7 billion during the first five months (July-November) 2021/22. The current account posted a surplus of $1.87 billion in the same period of the last fiscal year.
The trade deficit widened 112 per cent to $20.65 billion during the period under review, compared with the deficit of $9.72 billion in the same period of the last fiscal year.
The rupee remained under pressure since the start of the current fiscal year. The local currency fell Rs20.65, or 13.11 per cent, from June 30, 2021 closing of Rs157.54 to the closing of Rs178.19 on December 28, 2021. In the open market, the buying and selling of the dollar was recorded at Rs179.70/Rs181.10 at 3:20pm PST.