The Pakistani rupee has taken a dip against the dollar once again and has reached its record lowest value ever. It closed at Rs 119.35 against one dollar in the open market on Friday. In the inter-bank market, the value was rather stable as it stood at Rs 115.61 against the dollar, according to State Bank’s data.
By the day’s end, Dollareast Exchange Company and forex.pk reported Rs. 119.80 and Rs. 119.10, respectively.
The huge trade deficit and an ever-increasing import bill contribute highly to the depreciation of rupee. The depleting foreign reserves and low exports mean that the upcoming government would have to further depreciate the rupee’s value to bridge the export-import gap.
Rupee vs Dollar
The decreasing value of rupee attracted a lot of dealers to buy the dollar in hopes of a better return. The government put up a condition of showing ID documents in any deal that involved buying or selling of $500 or more. After this condition, the supply of dollar in the open market dropped to $1 million from a daily average of $2 to $3 million.
Before, the dealers used to buy $2-$3 million daily from individuals in the open market.
Pakistan Forex Association President Malik Bostan added;
Buyers and sellers prefer to purchase and sell foreign currencies to unauthorized and unregistered currency dealers…this is the reason behind the low supply of dollars to legal currency dealers.
Bostan identified another reason that has been putting extra pressure on the rupee’s value. He added that demand for foreign currency increased heavily from Umrah pilgrims this year. Bostan told that around 2 million people have already been issued Umrah visas since December 2017.
Previously, Saudi Riyal, and Dirham were in surplus and were used to import dollars from Dubai. However, this year, Bostan told that;
Such foreign currencies are not in surplus now which has impacted the flow of dollars to the open market as well.
Pakistan’s foreign reserves stand at an all-time low value of around $10 billion as well.