The rupee’s 10-session depreciation run finally came to a halt as the local currency registered a marginal correction against the US dollar at the inter-bank on Friday. The rupee, however, remained at the level of 239.
According to the State Bank of Pakistan (SBP), the rupee closed at 239.37 against the greenback, rising by Rs 0.57 or 0.24% on the day.
The rupee on Thursday closed at 239.94, down 3.92 or 1.63% on a day-to-day basis, amid pressure on import payments and the government’s inability to intervene.
Rising political and economic tensions have kept the rupee strong against the US dollar. Despite Friday’s gains, the local currency has lost over 13% in the past 11 trading sessions.
“Political tensions escalated again in Punjab following a change in the political structure, deepening uncertainty and impacting the overall economic scenario of the country,” Trust Securities and Brokerage Ltd said in a note on Friday.
On Thursday, S&P Global Ratings (previously Standard & Poor’s) revised the outlook for Pakistan’s long-term rating from stable to negative, reflecting the country’s weak outlook against the backdrop of higher commodity prices, tighter global financial conditions and a weaker rupee. to reflect external metrics.
“This will hurt equity and forex markets, impacting the rupee, which is already facing a free-fall scenario, eroding market confidence,” Trust Securities and Brokerage Ltd said.
In addition, the State Bank of Pakistan’s reserves declined by $754 million to $8.575 billion.
Meanwhile, economic experts have expressed concern over currency free fall, urging officials to take measures to stem the fall.
In a video message, Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan (ECAP), said, “Being an import-oriented country, the increase in the dollar rate adds to our difficulties, while also increasing the country’s external debt.”
“Also, our expenses are more than our income. However, the government is unwilling to cut down on its expenditure, adding to the pressure on the national exchequer,” he said.
Paracha pointed out that the USD is being sold at the Rs 250 level in the “black market”, while the authorities have taken a lax attitude in this regard.
The story was originally published in Business Recorder on July 29, 2022.