Rupee Depreciation Against US Dollar Part of Global Phenomenon: SBP

The State Bank of Pakistan (SBP) Tuesday said that the recent movement in the Rupee is a feature of a market-determined exchange rate system under which the current account position, relevant news items, and domestic uncertainty determine daily currency fluctuations.

In a series of tweets, the central bank said that the recent depreciation of Pakistani Rupee against the US Dollar is also in large part a global phenomenon.

The central bank said that globally, the US Dollar has surged by 12 percent in the last 6 months to a 20-year high, as the Federal Reserve has aggressively raised interest rates in response to rising inflation.

It said that like most advanced and emerging market currencies across the world, the Rupee has depreciated by 18 percent against the US Dollar since Dec 21.

The central bank added that in real effective terms—i.e. against a basket of currencies in which Pakistan trades and adjusting for inflation—depreciation in the Rupee since Dec 21 has only been 3 percent. This is a better measure of the strength and competitiveness of a currency than the US Dollar rate.

It is pertinent to mention here that Rupee shattered all previous records on Tuesday, falling to a new low of 221.99 against the US Dollar. The local currency fell by Rs. 6.79 in the interbank market, depreciating by 3.06 percent against Monday’s close of Rs. 215.20.