Islamabad, 23 August 2022 (TDI): The SBP reported on Monday that the Rupee was under pressure to start the week, shedding Rs 2.01 to the US dollar in the interbank market.
The local currency decreased from Friday’s closing rate of 214.
65 Rupees to Saturday’s closing rate of 216.66 Rupees per dollar, as reported by the State Bank of Pakistan (SBP).
Reasons for Rupee depreciation
The Chairman of the Forex Association of Pakistan (FAP), Malik Bostan claimed that the recent decision to ease the import restriction on luxury goods was a factor that declined the Rupee value.
Furthermore, he added that pressure from exporters requesting the government to maintain the dollar rate at 216 Rupees were the causes of the downfall in Rupee value.
Additionally, Malik Bostan said, “Commercial banks are also buying dollars at high rates, which is causing the greenback’s value to rise. The Central Bank must control commercial banks in this regard to halt the rise in the dollar’s value”.
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Besides this, the political instability is adding to the depreciation of the Rupee. It is also noteworthy that the Roshan Digital Account (RDA) inflows have slowed down.
In the same vein, IMF inflow has mainly factored in but there is a long line of imports. Consequently, the Rupee may swing back and forth between 220-225.
Along these lines, this development has undervalued Pakistan’s currency in the global and local markets. The cost of the US dollar on the world market has also increased as a result.
Also, due to a sudden shortage of US dollars on the open market, the greenback price increased compared to its interbank rate.
It is pertinent to note here that like the US dollar, the Emirati dirham is not available in the open market. Similarly, its price has also gone up.
Aside from that, the available foreign currencies are exported to Dubai. This brings back an equal amount of US dollars.
As a result, higher dirham demand has created a shortage of dollars.
