The Pakistani rupee continued to extend its losses on Wednesday, falling by Rs1.04 against the dollar during morning trade in the interbank market.
The PKR was being traded at Rs220.75 per dollar around 11:13am, a depreciation of 0.47 per cent from yesterday’s close of Rs219.71, data shared by the Forexx Association of Pakistan showed.
The dollar had managed to make a slight gain against the rupee on Oct 12, breaking its 13-day rally triggered after the announcement of Ishaq Dar’s appointment as finance minister.
The local currency appreciated by almost Rs22, or 10.1pc, against the greenback in those 13 sessions. However, since the reversal of the trend, the PKR has lost Rs1.92, or 0.88pc, in the last five sessions.
Head of Research at Tresmark, Komal Mansoor, attributed the rupee’s decline to a “continuous erosion” of the country’s foreign reserves, which fell to a three-year-low in the week ending Oct 7.
“Foreign exchange swaps are also in negative territory and depict thin dollar liquidity in the interbank market. Pakistan CDS (Credit Default Swaps) are also on the rise,” she added.
Mansoor said that while a decrease in the trade deficit and Dar’s comments on the rupee being undervalued made a case for the local currency’s support, there was still a strong appetite for dollars both in the interbank and open market which would keep the rupee under pressure.
Exchange Companies Association of Pakistan (Ecap) General Secretary Zafar Paracha also shared a similar view. There was a severe shortage of dollars in the open market, he said.
