The US dollar continued to decline on Wednesday—the third day of the business week in the InterBank Foreign Exchange market.
According to the data released by the State Bank of Pakistan, the dollar depreciated by 9 paisas in the interbank market.
Central bank data shows that the Pakistani Rupee against the US dollar cherished 0.6% in the interbank market to close at Rs155.69.
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.
Since August 26, the dollar has depreciated by almost Rs15 in the interbank market, while in seven months the dollar has depreciated from Rs168.43 to Rs154.40 in the interbank market.
The rupee had traded at Rs 161.13 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.
“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 Rs154.2 - 155.9 per dollar,” said a currency exchange dealer.
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 demand for the hard currency remained subdued due to fewer import payments. Strong inflows from remittances and Roshan Digital Account have increased the dollar supplies in the market,” said a currency dealer.
Dealers said the local unit continued to march upwards due to soft importers’ dollar demand and inflows from remittances, Roshan Digital Account, and export proceeds.
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.