KARACHI: The Pakistani rupee on Wednesday depreciated by 11 paisa against the US dollar and hit Rs158.70 in the interbank market with slight fluctuation at the early trade hours.
Ahead of Eidul Azha, Pakistan received higher remittance inflows from overseas Pakistanis in the first month of July of the current fiscal year 2019-20 – which in turn assisted the local currency in recovering against the greenback.
Currency traders were of the view that the increasing inflows of remittance in connection with Eid-ul Azha had supported the local rupee in the market. According to them, the majority of inflows had come from Saudi Arabia and other Gulf countries, including the United Arab Emirates (UAE).
In the earlier weeks, the rupee had been observed to cumulatively depreciate against the greenback, which in turn had resulted in increased prices of goods and hardships for the general public.
The SBP let the rupee depreciate significantly in the inter-bank market after finalising an agreement with the International Monetary Fund (IMF) for a loan programme on May 12.
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.
On the other hand, the World Bank Group has also supported the idea of leaving the rupee free from state control in an attempt to give much-needed boost to exports and fix a faltering economy.
In previous weeks, the local currency depreciated massively despite receiving the first tranche of $991.4 million from the International Monetary Fund (IMF).
The stringent conditions – on which the global moneylender has formally approved the bailout package of $6 billion for Pakistan – seem to have exerted more pressure on the local currency.
The gradual drop in the rupee had come due to high demand for the dollar against thin supply as the country continued to make aggressive international payments to partially pay off huge foreign debt and for imports.
Economists are of the view that effective measures must be implemented on the priority basis to recover the state from the balance of payment deficit.
Besides increased demand of the greenback in the local market, they have termed ‘balance of payments deficit’ as the main reason in the recent hike in the value of the US dollar.
Moreover, they consider that state’s exports and investment are required to grow significantly, and the imports must be reduced to remove pressure on the local currency.
According to experts, the government must ensure implementations on economic policies after the deal with the IMF.
It is anticipated that the US dollar rate would fluctuate for some time, and the value of the Pakistani rupee would stabilise after proper implementation of the economic policies.
KSE-100 hits 30,723 points
The KSE-100 Index of the Pakistan Stock Exchange (PSX) on Wednesday witnessed an upward trend by gaining 304 points in the early trade hours. Till last report, the index stood at 30,723 points.
According to analysts, the recent simmering tensions between nuclear-armed Pakistan and India over Kashmir dispute have pushed investors to adopt cautious behaviour in the trading.
Besides, the stringent policies, implemented following passage of the financial budget for the fiscal year 2019-20, are reflecting themselves in the downfall of the stock market. Moreover, they have anticipated no improvement in the financial results of many companies.