The rupee snapped a five-day losing streak against the dollar on Thursday, gaining 94 paisa to close the session at Rs168.18 in the interbank market — a slight recovery from yesterday’s close of Rs169.12.
According to an update posted at 10:52am on Mettis Global, a web-based financial data and analytics portal, the dollar traded at 167.85/167.95 before it closed at Rs168.18 in the interbank at 3:30pm.
Currency dealers say the greenback fell by Rs1.10 to Rs168.70 (3.30pm) in the open market against its peak of Rs170.7 on Wednesday.
Zafar Paracha, secretary general of the Exchange Companies Association of Pakistan, said the dollar depreciated due to the intervention of the State Bank of Pakistan (SBP) and expressed hopes for further improvement in days to come.
Paracha said the dollar was depreciating due to an increase in supply and decrease in 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 hitting an all-time high at Rs168.94 on Tuesday.
On Wednesday, the greeback hit a new peak at Rs169.70 during the session, but the selling of dollars by commercial banks on behalf of the SBP helped the rupee to gain some weight and the dollar closed at Rs169.12 in the interbank.
The domestic unit has depreciated by 6.32 per cent or Rs10.63 in the fiscal year-to-date against the dollar. Similarly, the rupee has weakened by 4.96pc or Rs8.34 in CY21, with the month-to-date (MTD) position showing a decline of 1.07pc, as per data compiled by Mettis Global.
The rupee, which has been termed the worst performing currency in Asia, has been losing purchasing power fast in the domestic market too, causing inflation that has badly hit the general public.
The high value of the dollar directly increases the cost of imported goods and indirectly causes high inflation. The country’s import bill reached $54 billion in FY21.
SBP not to allow 'speculations'
Mettis Global quoted SBP Deputy Governor Dr Murtaza Syed as telling a private TV channel that the central bank would not allow speculations on the matter.
He said the SBP had more reserves and speculators would lose once the currency changed direction.
Meanwhile, Asad Rizvi, former treasury head of Chase Manhattan bank, commented on the rupee's appreciation today, saying “SBP prohibits free movement of currencies and due to regular reporting and better control of the central bank, exchange companies have no room to manoeuvre.”
SBP is not intervening in the market as it provides funds directly, which is called sterilisation, he added.
The central bank had also indicated earlier that the dollar could appreciate during the current financial year due to an expected higher current account deficit.