The rupee continued to lose its ground against the US dollar during the second consecutive session in the interbank market on Monday, depreciating by Rs1.2 to close the day's trade at Rs163.67 per USD.
This is the lowest level hit by the rupee against the greenback since Oct 13, 2020, when it was traded at Rs163.87.
In the previous session, the home unit had closed at Rs162.43 per dollar.
After 11 months of surplus, the reported deficit of the current account and surging oil prices are bearing down on the rupee, reinforced by the recent decline. Additionally, market forces such as demand and supply also played their role in determining the exchange rate.
The demand for dollars continues to be strong due to pressure from importers on the back of strong economic recovery, pushing the domestic currency lower.
However, a few offsetting factors provide some cushion such as Pakistan’s foreign exchange reserves which are still at a fairly robust level, amounting to a total of nearly $25 billion on July 23, according to Asad Rizvi, the former country treasurer of Chase Manhattan Bank.
Anticipating the PKR outlook, he said the volume of remittances would likely surge in the months to come amid the fourth wave of Covid-19, and that compliance with FATF conditions regarding anti-money laundering would also play its role in rupee stability.
Moreover, oil prices in the international market are likely to ease off in the coming weeks which will also support the local currency to release some pressure, he added.
The rupee saw moderate volatility in today’s session and traded in the range of Rs1.60 rupees per USD, showing an intraday high of Rs163.90 and an intraday low of Rs162.45.
In the open market, the PKR was traded at Rs163.20/164.20 per dollar.
According to data compiled by Mettis Global, the local unit has depreciated by 3.74 per cent or Rs6.12 in the fiscal year to date against greenback. Similarly, the rupee has weakened by 2.34pc or Rs3.83 in CY21 with the month-to-date position showing a decline of 1.43pc.
Meanwhile, the currency lost 88 paisa to the pound sterling as the day's closing quote stood at Rs227.89 per GBP, while the previous session closed at Rs227.01 per pound.
Similarly, PKR's value weakened by Rs1.3 against the euro, which closed at Rs194.57 in the interbank today.
The overnight repo rate within the money market towards the close of the session was 7.15/7.30pc, whereas the one-week rate was 7.10/7.15pc.