Rupee Falls Against US Dollar After Eid Holidays

Pakistani rupee lost its ground during today’s trade as it went down by Rs. 1.12 to Rs. 163.10 against the US dollar.

During the intraday trading, the rupee closed at 163.10 to the dollar from the previous day’s close of 161.98 in the interbank market.

After the resumption from Eid holidays and ease in lockdown, dollar demand increased significantly. The demand increased due to the settlement of import payments while importers also started purchasing dollars for future buying.

FX experts also highlighted that fall in exports and remittances also created pressure on USD-PKR parity, says Yaqoob Abubakar from Tresmark, an application that tracks financial markets.

A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities told ProPakistani that,

This is monetary easing and external debt outflows led pressure on the currency. New sources of funding are being devised but this may take short term to pour in from multi lateral donors. The movement doesn’t appear disorderly yet that should warrant any intervention.

Since yesterday, Rupee has shed around Rs. 2.19 against the US dollar. Some dealers are expecting the rupee to lose further ground in the coming sessions, owing to persistent dollar demand in the market.

Traditionally, the demand for the dollar increases after the long holidays, as it impacted adversely on the value of the Rupee. As the business gets routine pace, the impact of the depreciation of the Rupee against dollar eases off in the next one or two weeks. Besides, the inflows of foreign exchange through remittances and exports income also improve within this period that will also dilute the pressure from the local currency.

Pakistan’s foreign exchange reserves declined to $18.597 billion in the week ended May 21 from $18.618 billion a week ago, reported the State Bank of Pakistan. The foreign exchange reserves held by the State Bank of Pakistan (SBP) fell $55 million to $12.073 billion due to external debt repayments.

The foreign exchange reserves of commercial banks; however, stood at $6.524 billion compared with $6.489 billion in the previous week.