KARACHI: US dollar’s onslaught against the Pakistani rupee continued as the local currency touched the 225 level in the opening hours of the trading session in the inter-bank market on Wednesday.
At around noon, the rupee was being quoted at 224.97, a depreciation of Rs2.98 or 1.3% against the greenback during intra-day trading.
On Tuesday, Pakistan’s rupee closed at a record low of 221.99 against the US dollar, going as low as 224 during intra-day trading amid renewed political uncertainty that wrecked market confidence and also gave “speculators” additional fodder.
On Monday, the rupee had closed at the then-record low of 215.2 after depreciating nearly 2% against the US dollar in the inter-bank market as political uncertainty after Punjab by-polls threw the market into a frenzy.
The stock market has also tanked in the previous two sessions owing to political noise, as the benchmark KSE-100 Index ended the trading session 978 points lower on Tuesday.
In a reaction to the development on Tuesday, the State Bank of Pakistan (SBP) in a late-night announcement said the recent rupee depreciation against the US dollar was “in large part a global phenomenon,”, adding that in real effective terms, the “depreciation in the rupee value since December 2021 has only been 3%.”
“This is a better measure of the strength & competitiveness of a currency than the US$ rate,” the SBP said on its Twitter account.
In a series of tweets, SBP said that the recent movement in the rupee value was a feature of a market-determined exchange rate system.
“Under this system, the current account position, relevant news items, and domestic uncertainty together determine daily currency fluctuations,” it highlighted.
It further said that globally, the US dollar has surged by 12% in the last 6 months to a 20-year high, as the “Fed has aggressively raised interest rates in response to rising inflation.”
“Like most advanced and emerging market currencies across the world, the Rupee has depreciated against the US$ since Dec 21,” it said, adding: “It has depreciated by 18% over this period.”
However, the statement noted that when evaluated in real effective terms against a basket of currencies in which Pakistan trades and adjusts for inflation, the depreciation in the rupee since Dec 21 has only been 3%.