KARACHI: The US dollar gained strength against the Pakistani rupee on Monday, reaching Rs167.23 in the interbank foreign exchange market.
The Pak Rupee (PKR) closed at Rs167.23 per dollar, marking a depreciation from last Friday’s closing rate of Rs166.91 in the interbank market.
According to currency experts, the dollar demand remained high as the market resumed operations after the weekend. Increased import payments and a widening trade deficit contributed to the depreciation of the rupee in the interbank market.
The trade deficit surged significantly in August 2021, reaching a record monthly increase of over 144 percent. Data released by the Pakistan Bureau of Statistics (PBS) indicated that the trade deficit for August 2021 stood at $4.23 billion, a sharp rise compared to the $1.73 billion deficit recorded in August of the previous year.
Market analysts pointed out that the growing trade deficit has negatively impacted investor sentiment, leading to increased dollar demand in the interbank market. The ongoing pressure on the rupee is attributed to the rising cost of imports, with businesses needing more dollars to settle international transactions.
Experts believe that the rupee may continue to face depreciation in the coming days as the demand for the dollar remains high in the interbank market. However, they also noted that potential inflows from export receipts and workers’ remittances could provide some relief to the local currency.
Despite the current depreciation, traders and financial analysts are closely monitoring external financial inflows and economic policies that could impact the stability of the interbank market. The government and the central bank may take necessary measures to manage exchange rate volatility and ensure a balance between supply and demand for the dollar.
The interbank foreign exchange market remains under scrutiny as financial institutions and traders assess the impact of global economic trends on the local currency. With the dollar demand showing no immediate signs of easing, the rupee is expected to remain under pressure in the short term.