KARACHI: Pakistan’s national currency on Thursday hit a new all-time low against the United States dollar to close at Rs177.61 on the back of increasing trade deficit, analysts and traders said.
The country’s trade deficit during the July-November period posted a growth of 112 percent, reaching $20.6 billion. The import bill for the month of November, 2021, increased to $7.8 billion, according to the Pakistan Bureau of Statistics (PBS).
The higher demand for import payment continues to exert pressure on the national currency which has lost its value by almost 17 percent since May.
The rupee lost 18 paisa -- or 0.10 percent -- in the interbank market during the trading session on Thursday, the data released by the State Bank of Pakistan confirmed.
“The demand for dollar is higher than its supply mainly due to the import payments,” Samiullah Tariq, director research at the Pakistan-Kuwait Investment, told Arab News.
“The measures taken by the authorities to contain imports are likely to yield result by January 2022,” he said, adding: “The pressure on the rupee is expected to cool down by then.”
In October, Pakistan’s central bank imposed 100 percent cash margin on letters of credit (LC) for 114 goods with immediate effect to discourage unnecessary imports.
The currency in the open market was trading at Rs180.30 for selling and Rs179 for buying as compared to Rs179.5 and Rs178.3 on Wednesday, according to the Exchange Companies Association of Pakistan.
“The open market is taking its cue from the interbank market since there is little demand for the greenback in the former,” Zafar Parachi, the association’s general secretary, told Arab News. “The average daily trading in the open market has declined from $50-$60 million to $15-$20 million.”
The currency was expected to gain strength after Saudi Arabia deposited $3 billion in the State Bank of Pakistan last week, but there was only a marginal impact due to higher demand for the US dollar under the circumstances.
Traders said the market situation was very uncertain, though they also maintained the authorities did not seem concerned about the depreciation of the national currency.
“The effective exchange rate should be around Rs165,” Parachi noted, “but speculation is driving the currency down while the body language our top officials seem quite relaxed.”
“There is no improvement in sight,” he continued, adding: “All estimates of government officials and experts have failed.”
Traders said if the government wanted to further devalue the national currency, it should do it at once to end market uncertainty.
