Pakistani currency hit a new all-time low of Rs170.8 against the US dollar in the inter-bank market on Monday as demand for the foreign currency stood higher compared to its supply in the wake of increase in import payments, rising global commodity prices and worsening financial situation in Afghanistan.
The rupee recorded a fresh depreciation of 0.19% (or Rs0.32) on Monday, the day when the Pakistan Bureau of Statistics (PBS) reported that the country’s import bill remained perched at higher levels at $6.47 billion in September 2021.
There was a jump of $1 billion in import payments as they hit an all-time high of $6.59 billion in August compared to $5.57 billion in the previous month.
The rupee has depreciated a cumulative 1.55% (or Rs2.61) since surpassing the 13-month-old record low of Rs168.43 two weeks ago on September 20, according to the central bank data.
“The rupee has maintained its downward movement on panic buying of dollar by importers following a notable surge in the import bill and increase in commodity prices in global markets,” Taurus Securities Head of Research Mustafa Mustansir said while talking to The Express Tribune.
Read Economic recovery and exchange rate
The worsening of financial crisis in Afghanistan also took a toll on the Pakistani rupee.
“Reports suggest that Afghan importers are arranging dollars from Pakistan’s open and black markets since the US has denied the Taliban access to Afghanistan’s foreign exchange reserves,” he said.
The real effective exchange rate (REER) – the cost of Pakistan’s trade with the world – has improved to 97 points compared to over 102 points a couple of months ago.
“REER suggests that the Pakistani currency stands at a fair value against global currencies these days. However, speculative elements are not allowing the rupee a respite from the continued slide,” he said.