KARACHI: The decline in the rupee against the dollar continued as it closed at the historic low of Rs184.09 on Friday amid depleting forex reserves coupled with political and economic uncertainty at the domestic front.
The local unit fell 61 paisas against the dollar from last day’s closing of Rs183.48 in the interbank foreign exchange market.
Currency experts said that the massive outflow of foreign exchange for repayment of external debt kept pressure on the exchange rate.
The rupee remained under pressure due to the political uncertainty in the country, external payment demand and volatile international oil prices amid the Russia-Ukraine war, they added.
They said that a no-confidence motion against the prime minister by the opposition parties had resulted in negative sentiments in the market, adding that the surging dollar demand for importing goods related to the holy month of Ramazan also escalated the dollar demand.
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 played a part in depressing the rupee value. The country’s foreign exchange reserves depleted by around $8.67 billion in just seven months, falling from a record high of $27.23 billion.
The foreign currency reserves of the country declined to $18.554 billion by the week ended March 25, 2022, the State Bank of Pakistan (SBP) said.
The ballooning current account deficit is another reason for escalation 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 local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs26.55 or 16.85 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs184.09.
At the open market, the buying and selling of the dollar was recorded at Rs184.2 and Rs185.7 at 4:00pm PST.