The rupee fell for a second consecutive session, crossing 165 levels and depreciating Rs0.43 against the US dollar in the inter-bank market on Tuesday due to heavy demand from the importers, closing at Rs166.39.
According to the State Bank of Pakistan (SBP), the local currency had closed at Rs165.96 against the US dollar on Monday.
The greenback saw an increase by Rs1 in the interbank on August 25 to close at an 11-month high against the rupee; with the latest drop, the rupee has depreciated 9.2 per cent since hitting a recent high of Rs152.28 against the US dollar on May 14, 2021.
Local media reports quoted dealers saying that the increased demand for oil and industrial imports outweighed waning dollar inflows from exports and remittances.
Local media reports state that authorities are letting the rupee depreciate to discourage rising imports and encourage exports in an attempt to narrow down the widening trade deficit; however, fear of higher current account deficit (CAD) in FY22 is convincing buyers to book more dollars for future imports.
It is pertinent to mention here that the country’s the forex reserves of the country are at the peak.
Moreover, Pakistan set to hold staff-level talks with the IMF on resuming the programme in September.