Pakistani Rupee Falls for Third Consecutive Day, dropping by Rs0.05 to close at Rs278.73 against the US dollar in the inter-bank market. This depreciation follows mixed reports regarding the resumption of foreign currency smuggling from Pakistan to neighboring countries.
State Bank of Pakistan (SBP) data reveals that the rupee has dropped a total of Rs0.23 over the past three working days, compared to Rs278.50/$. Recent reports indicate that illegal currency traders, including Hawala-Hundi operators, have reactivated their networks after a hiatus.
These traders are offering an additional Rs4 per dollar, tempting individuals to sell their foreign currency to them. This trend is discouraging sales in legal markets, such as the inter-bank and retail currency markets, potentially exacerbating pressure on the rupee. The situation could also affect worker remittances and export earnings.
Market sentiment anticipates a 5% depreciation of the rupee for the ongoing fiscal year, prompting currency buyers to pay higher prices for the dollar. Concurrently, the central bank’s dollar purchases to boost foreign exchange reserves and manage foreign debt repayments are contributing to the rupee’s weakening.
However, it is worth noting that bilateral creditors, including Saudi Arabia, China, and the UAE, have agreed to roll over $12 billion in deposits and loans to Pakistan, a factor the market has largely overlooked.
