In the interbank market on Monday (4th October), the Pakistani currency fell to a new all-time low of Rs170.8 versus the US dollar, as demand for foreign currency outstripped supply in the aftermath of increasing import payments, rising global commodity prices, and the worsening financial situation in Afghanistan.
The currency fell to 0.19 percent (or Rs0.32) on Monday, the same day that the Pakistan Bureau of Statistics (PBS) reported that the country’s import bill remained at higher levels in September 2021, at $6.47 billion.
Import payments increased by $1 billion in August, reaching an all-time high of $6.59 billion, up from $5.57 billion the previous month.
According to central bank data, the currency has devalued by 1.55 percent (or Rs2.61) since breaking the 13-month low of Rs168.43 two weeks ago on September 20.
Taurus Securities Head of Research Mustafa Mustansir said, “The rupee has maintained its downward movement on panic buying of dollar by importers following a notable surge in the import bill and increase in commodity prices in global markets.”
Afghanistan and the deprecation of the rupee
The Pakistani rupee has also suffered due to the worse ongoing financial situation in Afghanistan
Mustafa Mustansir said, “Reports suggest that Afghan importers are arranging dollars from Pakistan’s open and black markets since the US has denied the Taliban access to Afghanistan’s foreign exchange reserves.”
The real effective exchange rate (REER), which measures the cost of Pakistani trade with the rest of the world, has dropped to 97 points from around 102 points a few months ago.
In addition, Mustafa Mustansir added “REER suggests that the Pakistani currency stands at a fair value against global currencies these days. However, speculative elements are not allowing the rupee a respite from the continued slide.”
