PKR slides against US dollar

According to the data released by the SBP, PKR against the US Dollar dejected by 41 paisas in the interbank market.

Interbank closing #ExchangeRate for today: https://t.co/t4wGUxZcMN pic.twitter.com/WVfI4gkD1F

— SBP (@StateBank_Pak) July 8, 2021

Central bank data shows that the PKR devalued 0.26% against the dollar in the interbank market to close at Rs159.33.

Earlier, the SBP let the rupee depreciate massively in the inter-bank market after the finalisation of an agreement with the International Monetary Fund (IMF) for a loan programme on May 12, 2019.

The IMF has asked Pakistan to end state control of the rupee and let the currency move freely to find its equilibrium against the US dollar and other major world currencies.

Also, the World Bank, which finances some of the infrastructure and social safety net projects in Pakistan, has supported the idea of leaving the rupee free from state control in a bid to give a much-needed boost to exports and fix a faltering economy.

It may be recalled that during the current financial year, the exchange rate fluctuated sharply and in August 2020 (FY 21), the rupee depreciated to its lowest level against the dollar, reaching Rs168.70 on August 20 last year.

The rupee then began to recover and has improved significantly against the US dollar over the past four months.

The rupee had traded at Rs161.13 on January 16 this year, gaining Rs2.32 per dollar or 1.4 per cent. On February 12, the dollar traded at Rs158.81 in the interbank market, the lowest level in three months.

It should also be noted that the depreciation of the dollar and the appreciation of the rupee came at a time when the International Monetary Fund (IMF) delayed its program for Pakistan for more than a year.

“The supply and demand position of dollars and the upcoming data on the country’s forex reserves will determine the future direction of the rupee. The rupee should conclude this month at Rs158.9 - 159.4 per dollar,” said a currency exchange dealer.

It is important to mention that the Pakistani Rupee appreciates when a lesser amount of rupees is required to get one USD whereas PKR depreciates when more rupees are required to get one greenback.