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KARACHI( Manend News) The Pakistani rupee continued on its downward trajectory on Monday, closing at 174.43 against the dollar due to uncertainty over resumption of the International Monetary Fund (IMF) $6 billion extended fund facility (EFF) programme.
Last week, the local unit closed at 174 after touching an intraday high of 174.96 against greenback in the interbank market, shedding a total of Rs2.80 against greenback. Currency dealers also attributed the rising trend in dollar value against rupee to a “strong sentiment” developed over the last many weeks that greenback would gain more value in the days ahead.
They believed that this was the very reason that exporters were also holding their proceeds, and would encash them once the dollar gains more against rupee. Similarly, overseas Pakistanis have also adopted a “wait and watch” approach in sending remittances, as they anticipate further increase in dollar value would benefit their families back home get more in terms of local currency, currency dealers pointed out.
The statement given by the governor of the State Bank of Pakistan (SBP) urging to view the devaluing rupee as beneficial to families dependent on remittances lent support to this sentiment.
He said that demand in the open market came from people sending money for education purposes or for health treatment, as well as for Umra, Hajj, tourism, and from those people saving in dollars.
“The purchasing power of the people has eroded immensely that they can’t afford to send money for education purposes or for health treatment,” Paracha said. He pointed out that tourism sector has also not opened fully and now the people have less money to save in dollars. “These factors collectively contribute to lower or no demand for dollars in the open markets,” Paracha added.
Pakistan’s remittance growth has declined to 12.5 percent in Q1FY22 compared to 31 percent in Q1FY21. Workers abroad sent $8 billion during Q1 compared to $7.14 billion during July-September 2020.
Continuous and massive depreciation of Pakistani rupee against the US dollar for the last several days is also linked to the ballooning current account deficit, which stood $3.4 billion in the first quarter of this fiscal, compared to a surplus in the corresponding quarter last fiscal. Courtesy The News.