The rupee hit a five-day losing streak against the dollar on Thursday and gained 94 paisa to close the session at Rs168.18 on the interbank market — a slight recovery from yesterday’s close of Rs169.12.
According to an update published at. 10:52 den Mettis Global, a web-based portal for financial data and analysis, traded the dollar at 167.85 / 167.95 before closing at 168.18 Rs in the interbank at. 15:30.
Currency traders say the greenback fell by Rs1.10 to Rs168.70 (15:30) on the open market against its high of Rs170.7 on Wednesday.
Zafar Paracha, secretary general of the Association of Pakistan Stock Companies, said the dollar was falling due to intervention by the State Bank of Pakistan (SBP) and expressed hope for further improvements in the coming days.
Paracha said the dollar was declining due to an increase in supply and declining demand, adding that “this trend may continue”.
The rupee had been in a free fall against the dollar for the past five days, with the dollar reaching an all-time high of Rs168.94 on Tuesday.
On Wednesday, greeback hit a new high of Rs169.70 during the session, but selling dollars from commercial banks on behalf of SBP helped the rupee gain some weight and the dollar closed at Rs169.12 in the interbank.
The domestic unit has fallen by 6.32 percent or Rs10.63 in the fiscal year to date against the dollar. Similarly, the rupee has weakened by 4.96 pcs. Or Rs8.34 in CY21, where the month-to-date position (MTD) shows a decrease of 1.07 pcs. According to data compiled by Mettis Global.
The rupee, which has been described as the worst performing currency in Asia, has also lost purchasing power rapidly in the domestic market and caused inflation, which has hit the public hard.
The high value of the dollar directly increases the cost of imported goods and causes indirectly high inflation. The country’s import bill reached $ 54 billion in FY21.
SBP does not allow ‘speculation’
Mettis Global quoted SBP’s deputy chief, governor dr. Murtaza Syed, who told a private TV channel that the central bank would not allow speculation on the matter.
He said the SBP had more reserves and speculators would lose when the currency changed direction.
Meanwhile, Asad Rizvi, former head of state of the Chase Manhattan Bank, commented on the rupee’s appreciation today, saying: “The SBP prohibits free movement of currencies and due to regular reporting and better control of the central bank, exchange companies have no room to maneuver.”
SBP does not intervene in the market as it provides funds directly, which is called sterilization, he added.
The central bank had also previously indicated that the dollar could rise during the current fiscal year due to an expected higher balance of payments deficit.