Dollar hits a 10-month high against the rupee
The US dollar appreciated a 10-month high against the Pakistani rupee.
According to the report, the dollar has been appreciating since May this year due to various reasons including high current account deficit and import bills.
In the second half of the financial year 2021, the current account deficit was monthly, but due to the successes achieved in the first half, it remained in surplus for 11 months and in the month of June, the full-year surplus reached 0.6% of GDP.
The dollar was at Rs 164 on October 6 last year, but it has been declining since it touched an all-time high of Rs 168 in August, and the dollar closed at Rs 164 a paise yesterday.
Since May 2021, the dollar has appreciated by 7.15% against the local currency, which has not only increased the cost of imported goods but also created uncertainty over the stability of the exchange.
Earlier, SBP Governor Reza Baqir had said that the appreciation of the dollar was natural as the current account deficit is expected to widen to 2 to 3 per cent of GDP in FY 2022.
He said that if the exchange rate did not increase despite the growing current account deficit, it would mean that the exchange rate was being maintained, which is dangerous for the country’s economy.
The exchange rate has been volatile since the start of the new fiscal year as the local currency has fallen 3.94 per cent against the US dollar.
The market reacted to the announcement of 2-3% of the current account deficit by the policymakers and the importers rushed for more money.
However, the SBP said higher imports were needed for higher economic growth.
Fortunately, the government received a record remittance of 29 29.4 billion in the fiscal year 2021, compared to 2 2.7 billion in July.
On the other hand, although the SBP’s foreign exchange reserves are in good shape, it relies heavily on borrowing to keep it at about ً 18 billion.
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