KARACHI: The rupee kept losing its value against the US dollar and depreciated to Rs224.70 on Tuesday which forced the gold prices to go up setting a record in the local market.

Since the beginning of the current fiscal year, the dollar has been appreciating against the local currency due to many factors including the poor foreign exchange reserves of the country and rising fear of default on the external account.

The local currency has lost 21.45 per cent of its value against the greenback since the start of the current fiscal year due to economic instability.

The country has yet not found a clear path to move with a stable exchange rate. This political uncertainty cost the country heavily as it discouraged foreign direct investment which hit the lowest level in October.

The interbank exchange rate of Rs224.70, up by 5 paise from the last closing, was not considered a real dollar price. Bankers say the interbank dollar rates are being grossly manipulated and restricted for imports of certain sectors as no large payments were made except for petroleum products.

However, its impact on the gold in the local market is visible in the light of dollar appreciation. Most of the gold is smuggled into the country. There is no identification of gold in the list of imports but the price still fluctuates with the dollar prices in the local market.

The local gold price on Tuesday hit a new peak of Rs170,800 per tola and 10-gram at Rs144719, according to the All Sindh Saraf Jewellers Association.

Gold is globally considered a safe investment option but the yellow metal prices fluctuate massively in the international market and cause losses to short-term investors as bullion dealers advise long-term investment.

Published in Dawn, December 14th, 2022