The Pakistani rupee experienced a decline of Rs1.35 against the US dollar in interbank trading on Monday. This follows a continuation of losses from the previous week. The local currency closed at Rs297.13, rising by Rs1.35 from last week’s close of Rs295.78 according to data shared by the Exchange Companies Association of Pakistan (ECAP). In the open market, the dollar was being exchanged for Rs307.
Financial experts attribute the decline to a gradual opening up of imports and the retirement of letters of credit (LCs). Additionally, international oil prices are increasing, and the repayment of foreign debt is also impacting the exchange rate.
Komal Mansoor, Tresmark’s Head of Strategy, suggests that the depreciation of the rupee is a common outcome during a caretaker set-up, and the current account deficit and import backlog payment further exacerbate the situation. She adds that the market is anticipating the local currency to surpass Rs300 against the US dollar.
Zafar Paracha, the Secretary General of ECAP, predicts that there will be continued pressure on the rupee in the near future. He attributes the losses to speculation and manipulation by certain groups. Paracha also raises concerns about the development of a “grey market” and conflicting government policies, resulting in economic and political uncertainty in the country. He emphasizes the need for restructuring, de-regularization, and streamlining of operations to address these challenges.