The Pakistani Rupee appreciated by 20 paisas against the US Dollar on Tuesday to close at 168.52.
Yesterday, it depreciated by 53 paisas against the US dollar (USD) and closed at 168.72.
Last week, the local currency recovered from a record-low against the USD, following comments from the Governor of the State Bank of Pakistan.
The financial research company Capital Stake tweeted that most Asian currencies have depreciated against the USD in 2021. Sri Lanka tops the list, with its local currency falling 7.84 percent against the USD, followed by Pakistan’s rupee sliding 5.88 percent.
How have Asian Currencies Performed against the USD during 2021?
Most of the currencies in the region have depreciated against the US #dollar during the year. The top decliners include Sri Lanka, down 7.84%, followed by #Pakistan (5.88%).#currency #ExchangeRate #economy #forex pic.twitter.com/tgjWfx9KM9
— Capital Stake (@CapitalStake) September 21, 2021
The State Bank of Pakistan disclosed in a statement that it raised its policy rate by 25 basis points to 7.25 percent yesterday to shift the “burden of adjusting to the rising current account deficit” from the exchange rate to “other adjustment tools, including interest rates”.
The Managing Director at Khadim Ali Shah Bukhari Securities, A. A. H. Soomro, tweeted that this move will help to stabilize the rupee.
Should stabilise Rupee, not dent the PSX investors, marginally increase Banks' profits, taper the worries of skeptics & give investor confidence that risks are being managed to live within the means. Welcome to post-covid growth with a reality check.
— A A H Soomro (@AAHSoomro) September 20, 2021
In contrast, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, said that the rate hike could increase pressure on inflation and the Pakistani Rupee (PKR).
INTER BANK MARKET..
The urgency & timing of Ratd Hike needs to be watched carefully. If action is taken due to worsening of CAD & Faster Growth & Accommodation stays, it suggest expansion of Money Supply that will push CAD in 3-4% range, it’s inflationary & more pressure on #PKR
— Asad Rizvi 🇵🇰 (@asadcmka) September 21, 2021
The PKR also gained three paisas against the Pound Sterling (GBP), and six paisas each against the Saudi Riyal (SAR) and the United Arab Emirates Dirham (AED).
It also lost 22 paisas against the Euro, 39 paisas against the Canadian Dollar (CAD), and 57 paisas against the Australian Dollar (AUD).