With a widening gap between demand and supply of the US dollar, the value of Pakistani currency on Tuesday depreciated beyond 225 against the greenback in the inter-bank market after a gap of two and a half month.
The rupee slid by 0.08% (or Rs0.20) to Rs225.12 against the US dollar compared to Rs224.94 on Monday, according to the State Bank’s data.
The downtrend encouraged people to park their savings in gold in a bid to cushion the impact of rupee depreciation at a time when inflation was running high.
Consequently, the bullion hit a new all-time high of Rs178,800 per tola (11.66 grams) with a jump of Rs3,900 in a day. Earlier, the US dollar was a preferred asset for the people and investors, who injected their savings into the currency. However, it has gone short in the formal market, while in the open market the illegal Hawala-Hundi operators were selling the greenback for Rs240-250 apiece.
Pak-Kuwait Investment Company Head of Research Samiullah Tariq said “demand for the US dollar is tight (high)…that led to the slide in rupee’s value”. “The government has controlled imports through administrative measures but the greenback’s demand is still high,” he said.
Tariq anticipated that the rupee may move around current levels in the short run, considering that the government would soon persuade the IMF to begin the pending ninth review of its loan programme.
Published in The Express Tribune, December 21st, 2022.