Pakistani rupee hits all-time low against US dollar amid rising import bill

KARACHI: Pakistan’s currency traders and analysts blamed the county’s rising import bill for the ongoing depreciation of the national currency as the rupee lost 0.50 percent of its value before closing at an all-time low against the US dollar on Tuesday.
The Pak rupee closed the trading session at Rs168.94 in the inter-bank market, beating the previous record low of Rs168.87 in August 2020 while registering a decline of Rs0.84 or 0.50 percent, according to the State Bank of Pakistan.
The rupee was trading at Rs169 against the US dollar in open market on Tuesday, traders said.
“The rupee is constantly under pressure mainly due to external payments as the country continues to import food, energy and vehicles etc.,” Malik Bostan, chairman of the Exchange Companies Association of Pakistan, told Arab News.
Earlier this month, Bostan told Arab News that Pakistan’s national currency was also under pressure since about $2 million had been flowing out of the country after the fall of Kabul on August 15 due to the shortage of foreign currency deposit in the neighboring state.
Since May 2021, Pakistan’s currency has lost its value by 10 percent from a high of Rs152.28. The currency has shed 6.7 percent since June 2021, according to Arif Habib Limited.
The country’s central bank has also stayed away from the currency market, saying it wants to adhere to a market-based exchange rate policy. Previously, the State Bank of Pakistan used to sell dollars in the market to stabilize the currency.
“In market-based exchange management, central bank only intervenes if there are abnormal currency fluctuations,” Muhammad Sohail, chief executive officer of Topline Securities, told Arab News.
“Currently, the Pak rupee is falling due to the rising import bill and uncertainty regarding the IMF [International Monetary Fund] deal,” he said, adding: “I think that market forces should decide [the exchange rate parity].”
The central bank is scheduled to announce its money policy next week on September 20. Analysts expect the bank to increase its policy rate by 25 basis points (bps).
Following the rupee depreciation, the country’s stock market also reacted negatively, and the benchmark KSE 100 Index closed at 46,891 points, showing a decline of 379 points.