KARACHI: The State Bank of Pakistan (SBP) issued a report regarding the recent fluctuation in the currency rates, citing an international spike in dollar rates and ‘domestic uncertainty as reasons behind the huge devaluation of PKR.
The central bank shared the detailed report justifying the recent drop of the local currency against the USD on Twitter.
The report states that the recent movement in rupee rates is ‘a feature of a market-determined exchange rate system’.
The current account position, relevant news items, and domestic uncertainty together are causing the daily currency fluctuations, it read, adding that the recent depreciation against the US dollar is also in large part a global phenomenon. Globally, the dollar has surged by 12% in the last six months to a 20-year high, as the Fed has aggressively raised interest rates in response to rising inflation.
The report further added that like most advanced and emerging market currencies across the world, the Pakistani rupee has depreciated against the US since Dec 21, losing 18% value over this period.
The central bank clarified that in real effective terms-i.e. against a basket of currencies in which Pakistan trades & adjusting for inflation-depreciation in the Rupee since Dec 21 has only been 3%. This is a better measure of the strength & competitiveness of a currency than the US rate.
