Rupee hits record low against dollar

KARACHI: The rupee fell to an all-time low of Rs168.94 against the dollar on Tuesday after witnessing a huge demand for external payments, dealers said.

The exchange rate ended at Rs168.94 against the dollar from the previous day’s closing of Rs168.10 in the interbank foreign exchange market.

The previous all-time low of the rupee against the dollar was recorded at Rs168.44 on August 26, 2020.

The dealers said the market witnessed massive demand for import and corporate payments.

The local unit lost around 84 paisas against the dollar from the previous day’s closing of Rs168.10 in the interbank foreign exchange market.

The local currency has lost around Rs11.4 against the greenback during this fiscal year when the exchange rate closed at Rs157.54 on June 30, 2021.

Currency experts said due to the rupee devaluation, the domestic debt and inflation would increase. Further, manufacturing goods based on imported goods will not be viable for the manufacturers.

Dr Ashfaq Hassan Khan, a leading economist, said that there was a need to make changes in the State Bank of Pakistan (SBP). “The SBP has adopted a policy to devalue the local currency,” he added.

He said it was alarming that the country was receiving inflows and foreign exchange reserves were record high yet the value of the local currency was declining.

“The exchange rate should stabilise whenever the foreign exchange reserves increase,” he added.

The rupee is depreciating continuously and the current expenditure has also increased phenomenally. Similarly, the budget deficit has also increased. “These are not signs of improvement for the country’s economy, but it will increase debt,” he added.

Dr Salman Shah, former finance minister; however, attributed the rupee depreciation to the demand and supply factor.

He said when the market witnessed sudden increase in the dollar demand, the local unit came under pressure.

The economic indicators are positive. The government makes progress in import substitution and export promotion. “Further, inflows related to CPEC projects are also witnessed,” he said, adding that these will help the rupee rebound in the coming days.