The Pakistani rupee experienced a significant decline against the US dollar in mid-day trading on Monday, falling by Rs1.60 in the interbank foreign exchange market.
The sharp depreciation was attributed to heightened demand for imports and corporate payments as trading resumed after a week-long hiatus.
According to market reports, the dollar surged to Rs150.20 in the interbank foreign exchange market, marking a notable increase from the previous closing rate of Rs148.60 recorded on June 3, 2019. The resumption of trading following the Eid holidays saw a flurry of activity, with increased demand for foreign currency driving the rupee’s downward trajectory.
The closure of currency markets during the Eid holidays contributed to pent-up demand, exacerbating the pressure on the rupee as trading resumed. Currency experts cautioned that further depreciation in the rupee’s value was anticipated, citing concerns over potential tax measures to be announced in the upcoming budget for the fiscal year 2019/2020.
In addition to the interbank market, the open market also witnessed a depreciation in the value of the rupee against the dollar. Reports indicated that the dollar was being traded at Rs151.50, reflecting a decline in the rupee’s value compared to previous levels. In midday trading, the rupee lost Rs2.70 in the cash ready market, signaling investor unease and heightened volatility in currency markets.
The depreciation of the rupee against the dollar has raised concerns among investors and businesses, particularly those engaged in import-related activities. The weakening rupee is expected to increase the cost of imported goods and raw materials, potentially leading to inflationary pressures in the economy.
Furthermore, the depreciation of the rupee underscores the challenges facing Pakistan’s external sector, including a widening current account deficit and declining foreign exchange reserves. Authorities have reiterated their commitment to implementing measures to stabilize the currency and address macroeconomic imbalances, but the recent depreciation highlights the persistent vulnerabilities in the country’s economy.
In response to the rupee’s decline, market participants are closely monitoring developments and adjusting their strategies accordingly. The volatility in currency markets underscores the importance of effective risk management and prudent decision-making for businesses and investors operating in Pakistan.
As trading continues, stakeholders are bracing for further fluctuations in the exchange rate, with the rupee’s performance likely to remain under scrutiny amid evolving economic conditions and policy developments. Amidst these challenges, market participants are urged to exercise caution and remain vigilant in navigating the dynamic landscape of currency trading.
