Unable to sustain gains, Pakistan's rupee dropped to its weakest level in history against the US dollar, depreciating 0.54% in the inter-bank market on Thursday.
As per the State Bank of Pakistan (SBP), the PKR closed at 176.42 against the USD after a day-on-day depreciation of 94 paisas or 0.53%. The historic fall follows back-to-back gains when the rupee had closed at 175.48 against the dollar in the inter-bank market.
On Monday, rupee had fallen to its then-weakest level of 176.20 against USD.
The fall comes amid a more-than-expected increase in the trade gap, and record import figures in the month of November.
“The government needs to take aggressive measures to curb the imports as soon as possible, which translated into the import bill,” Tahir Abbas, Head of Research at Arif Habib Limited (AHL) told Business Recorder.
The rupee fall comes as Pakistan's equity market witnessed its worst day of the year, dropping over 2,200 points during the trading session amid anticipations of a further policy rate hike by the SBP in the coming days.
In November 2021, imports were recorded at nearly $8 billion, the highest in history, showing a growth of 80% on a yearly basis.
However, despite panic at the bourse, similar panic was not felt in the money market as they have already incorporated the impact earlier, Abbas added.
The analyst expects the currency to trade in a similar bandwidth for the time being.
Meanwhile, another analyst told Business Recorder that the currency would stabilise as soon as funds are received from international lenders.
Pakistan is expected to receive $3 billion from Saudi Arabia in the coming days. The funds will be deposited in the central bank, which is expected to ease pressure on the currency.
This article was first published in Business Recorder on Dec 2, 2021.