The rupee weakened further in the inter-bank market, crossing 200 against the US dollar during intra-day trading on Monday.
Reports indicate the rupee was hovering around 200.4 at around 2pm, a decline of nearly 1.2% during the trading session.
On Friday, the currency ended at 197.92 against the US dollar in the inter-bank market.
Last week, the rupee registered a 0.5% gain as the government’s move to start removing energy subsidies gave the currency market hope of the International Monetary Fund (IMF) programme revival.
The Pakistani currency appreciated in four out of the five sessions with the only decrease coming on Friday after Moody’s downgraded the outlook on Pakistan from stable to negative a day earlier.
While it maintained a B3 local and foreign currency issuer and senior unsecured debt ratings, Moody’s warned that Pakistan’s current account deficit will remain under significant pressure on elevated global commodity prices through 2022-2023.
The current account deficit, largely due to a mounting import bill, is key to the rupee’s strength which has depreciated massively in the last 12 months.
“The ongoing demand and supply pressure in the market has led to the decline in rupee value,” said Tahir Abbas, Head of Research at Arif Habib Limited (AHL). “There must be an import or debt repayment in the process, which has led to pressure in the market,” he said.
Facing a bulging import bill, Pakistan’s trade deficit widened by 57.85% during the first 11 months (July-May) of the outgoing fiscal year 2021-22, and reached $43.334 billion compared to $27.452 billion during the same period of 2020-21, according to data shared by the Pakistan Bureau of Statistics (PBS).
This is an intra-day update.
The story was originally published in Business Recorder on June 06, 2022.