Rupee dives to a fresh historic low

KARACHI: The rupee continued to deteriorate against the dollar on Thursday, declining 84 paisas to hit a fresh historic low of Rs183.48.

The local unit closed at Rs182.64 on Wednesday in the interbank foreign exchange market.

The local currency remained under pressure due to the volatile oil prices in the international markets due to the Russia-Ukraine conflict, dealers said.

On the domestic political front, the no-confidence motion against the Prime Minister Imran Khan by the opposition parties kept the market under pressure, they added.

The increasing dollar demand for importing goods related to the holy month of Ramazan also escalated the dollar demand resulting in further depreciation in the local currency.

The ballooning current account deficit is another reason for the spike in the dollar value. Pakistan’s current account deficit ballooned to $12 billion during the first eight months (July-February) 2021/22 against a surplus of $994 million in the corresponding months of the last fiscal year.

Although the current account deficit narrowed to $545 million in February 2022, compared with the deficit of $2.53 billion in January 2022, the scheduled external repayments are still a threat to the balance of payment.

The country has faced significant pressure on its foreign-exchange reserves in recent months, amid elevated global commodity prices and a recovery in domestic demand.

Large external payments against foreign debts have also played a part in depressing the rupee value. Pakistan’s foreign exchange reserves fell by $2.28 billion to $21.44 billion by March 18, 2022, compared with $23.72 billion as of February 4, 2022.

The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs25.94 or 16.46 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs183.48.

At the open market, the buying and selling of the dollar was recorded at Rs182.5 and Rs183.7 at 4:00pm PST.