KARACHI: Pakistani currency hit a much-anticipated level of Rs170.10 against the US dollar in the interbank market during intra-day trading on Wednesday.
According to the State Bank of Pakistan (SBP), the local currency had closed at Rs169.97 against the greenback on Tuesday.
The rupee further lost ground to an increase in demand for the dollar on the back of a historic high trade and current account deficit.
With the latest drop of Rs0.13, the local currency has depreciated 7.89% or Rs12.43 since June 2021 and 11.62% (or Rs17.7) since its recent high of Rs152.27 recorded on May 14.
Apparently, the authorities are letting the currency depreciate to discourage rising imports and encourage exports in an attempt to narrow down the widening trade deficit, which poses a threat to the country’s economy.
According to the Pakistan Bureau of Statistics, Pakistan’s two-month (July-August) trade deficit widened 120% to $7.5 billion after imports saw a new historic peak but exports plunged for the third successive month despite heavy subsidies being given to exporters and significant currency devaluation.
Moreover, the rupee may be moving down in search of the value that can help resume the International Monetary Fund’s (IMF) $6 billion loan programme, which has been on hold for the last two months. The country is set to hold staff-level talks with the IMF on resuming the programme on October 4.
