Pakistani currency continued to weaken for the fifth consecutive working day on Friday, as it dropped 0.68% (or Rs1.56) on a day-to-day basis to a new all-time low at Rs228.37 against the US dollar in the inter-bank market.
With this, the rupee has dived 8.25% (or Rs17.42) during the five days, according to the central bank data.
Market talk suggests the rupee has recorded the largest drop this week after 1998.
The latest drop of 0.68% in the rupee’s value came after the country’s foreign exchange reserves depleted $389 million to $9.33 billion in the week ended July 15, 2022, according to the State Bank of Pakistan’s (SBP) latest weekly update issued on Thursday.
Financial market analysts said the currency had continued to lose ground against the greenback on increased demand for dollars for import payments and due to reduced supplies.
Importers have made international payments including the pending ones in recent days. The pending payments were made against their import orders placed mostly during the last two months – May and June 2022.
Besides, exporters have stopped selling dollars in the market in anticipation of further drop in the rupee’s value till the IMF gives its final approval for revival of the loan programme for Pakistan sometime in late August.
State Bank of Pakistan injected Rs918.50 billion in commercial banks at increased rate of return of 14.90% for six-day period on Friday.
The central bank supplies the funds to commercial banks through open market operation (OMO).
Major purpose of the OMOs is to overcome shortfall of funds in the market so that the bank’s financing rate on financing to the government would remain stable.
Published in The Express Tribune, July 23rd, 2022.