The Pakistani currency continued its decline for the tenth consecutive business day, hitting a one-month low above Rs284 against the US dollar in the interbank market on Friday.
According to State Bank of Pakistan (SBP) data, the local currency fell 0.31 per cent, or Rs 0.88, to close at Rs 284.31 against the greenback.
The decline equates to a cumulative decline of 2.63 per cent, or Rs7.48, over the past two weeks, from its three-month high of Rs276.83 per dollar.
In the open market, the local currency declined by 0.17 per cent, or Rs 0.50, to close at Rs 285 per dollar, as reported by the Exchange Companies Association of Pakistan (ECAP).
The fall in the rupee is attributed to increased demand for foreign exchange in the domestic economy, mainly due to rising sales of automobiles, cement, petroleum products and repatriation of profits of foreign companies operating in the country.
On a separate note, on Thursday, Pakistan’s central bank announced an improvement in the country’s foreign exchange reserves (held by the SBP), with an increase of $14 million to $7.50 billion over of the week ending October 27. the currency has been better than the demand for the US dollar in the market.
Simultaneously, the IMF is conducting a relatively smooth review of Pakistan’s domestic economy under its ongoing $3 billion loan program. Pakistan has fulfilled almost all the requirements for the review. The market expects the Fund to approve the second tranche of its loan, amounting to $700 million, once the economic review is completed, which will further increase foreign exchange reserves.
Market discussions suggest that the domestic currency may soon stabilize around its current fair value of around Rs 285 per dollar due to fluctuations in the supply and demand of foreign currencies.
Gold prices rise
The local gold pricing body increased the gold price by Rs 1,100 to Rs 214,400 per tola (11.66 grams) in Pakistan on Friday.
The All Pakistan Sarafa Gems and Jewelers Association reported no change in the global gold price, which remained stable at $2,005 per ounce (31.10 grams) on a daily basis.
Published in The Express Tribune, November 4th2023.