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Rupee falls to historic low, closes near 233 against US dollar

Pakistan's $33.5-billion external financing needs are fully met for financial year 2022/23, says SBP
Updated 26 Jul, 2022 06:00pm
<p>Pakistani Currency and American Dollars.  Photo: APP.</p>

Pakistani Currency and American Dollars. Photo: APP.

Amid massive economic and political uncertainty, Pakistan’s rupee continued to take a battering at the hands of the US dollar with the currency closing near the 233 level in the inter-bank market on Tuesday.

As per the State Bank of Pakistan (SBP), the rupee closed at 232.93, a day-on-day fall of Rs3.05 or 1.31%, against the greenback.

The latest depreciation brings total loss to 10% for the rupee in the last eight trading sessions.

On Monday, the rupee had settled at 229.88, a depreciation of 0.66% or Rs1.51, with reports suggesting that the SBP was discouraging inter-bank trades in its bid to save fast-depleting foreign exchange reserves.

During the previous week, the rupee had lost 7.6% to the US dollar, more than what businesses tend to keep in mind over the course of a year in terms of annual currency depreciation, as heightened concerns over Pakistan’s external financing needs saw the inter-bank market go through a tumultuous five sessions.

The depreciation continued despite statements from the Ministry of Finance and the SBP that the country’s economic indicators remain sound.

While Finance Minister Miftah Ismail reiterated confidence that pressure on the rupee will decline, businesses are stressing over being quoted dollars at ‘premium’ rates, raising their costs.

The SBP has said that Pakistan’s $33.5-billion external financing needs are fully met for financial year 2022/23, but that has done little to arrest the rupee’s downward slide.

“Despite their statements, the market remains in a state of panic, which needs to be brought under control,” said an analyst on condition of anonymity, adding that the situation will remain this way until Pakistan secures dollar inflows.

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